Tesco Internal Communications: Managing Change Campaigns

Company Overview

Tesco is a British-based multinational grocery retail chain founded in 1919 by Jack Cohen. The company is currently the largest of its kind in Britain, with group worldwide revenues exceeding £50 billion, operations in 13 countries, and a workforce of more than 440,000 people (Tesco Annual Report, 2008).

Up until the 1990s, the retailer grew organically and by acquiring existing grocery stores, with expansion limited to the grocery sector. In 1997, Tesco made its first step outside this sector by forging a business alliance with Esso, leasing several petrol filling stations where Tesco would operate small supermarkets under the Express format and, in return, Esso would sell fuel via Tesco stores. In 2001, the retailer made its first international move by expanding into internet grocery retailing in the USA, followed shortly by Poland through the acquisition of 13 Hit supermarkets. The last international market entry was China in 2004. In 2003, the company expanded its operations into the telecom industry, complementing an internet service provider business acquired earlier. In addition to grocery, fuel, and telecom, Tesco also runs operations in garden centres and personal finance.

The retailer manages 3,728 stores worldwide, including 2,115 stores in the UK employing over 280,000 people; 814 stores across 5 countries in Asia employing over 77,500 people; 746 stores across 6 countries in Europe employing over 83,700 people; and 53 stores across 3 US states employing over 669 people.

Internal Communication: Theoretical Background

In a dynamic, globalized environment, change is an essential key to success. Tesco has repeatedly demonstrated its ability to adapt to volatile markets — including the international arena — by continuously evolving internally and externally to meet expectations.

Several aspects must be considered by an organization in times of change, among which employee involvement and clear leadership are seen as essential (Lydon, 2006). Changes need to be communicated throughout the whole organization in order to achieve the benefits these processes are intended to deliver. Internal communication is therefore key to successful organizational change. At Tesco, internal communication originally reported to the Human Resources department. As the emphasis on employees delivering on the promise of the Tesco brand increased, the internal communication function worked increasingly closely with corporate affairs and corporate marketing. It is now part of corporate affairs (Quirke, 2000).

Watson et al. (2005) identifies organizational communication as an important tool for securing the commitment of employees. Managers want their employees to identify with the company's goals and values and to work hard on its behalf, rather than taking independent action that may not align with those goals. Internal communication becomes increasingly challenging in multicultural environments. Tesco's internal communication department is responsible for communicating its brand internally to over 440,000 employees in 13 countries on 3 continents. The retailer is also keen to reach all employees before news about its operations or brand is mentioned in the national media — a challenge considered one of the most significant faced by the company (Tesco, 2008).

Hofstede (1984) defined culture as "the collective programming of the mind which distinguishes the members of one group of society from those of another." Communication between people from different cultures is not as fluid as between people of the same culture, owing to cultural distance — defined as "the extent to which different cultures are similar or different" (Shenkar, 2001). In the business world, cross-cultural conflicts are closely followed by communication breakdown (Acosta et al., 2004). Additionally, failed attempts to communicate with people from different cultures often escalate into conflict (Kimmel, 2000).

Tesco's employees have diverse cultural backgrounds, and while the communication of important issues must maintain a global consistency, the transmission of those messages should also incorporate local elements, since "one size does not fit all." In 1999, shortly after Tesco Plc. merged with Samsung in Korea, the new entity faced difficulties because Korean employees perceived the new management approach as lacking humanity and overly rational (Korea Institute for International Economic Policy, 2005). Korean culture tends to be more emotional and less transactional than British culture. To reconcile Tesco's corporate culture with local expectations, the Shinbaration Task Force was created — a blend of Shinbaram, the emotional reaction that helps individuals exceed their limits, and rationality. The Shinbaration campaign's goal was to stimulate teamwork and foster a working environment in which employees could surpass their own expectations.

Communicating at a level appropriate to staff's education is also important, as it enables optimal message transmission and assimilation. In the early stages, Tesco's employee communication was informational and consisted of presenting the company's business plan to its people — either through personal letters sent directly to employees, via two-way sessions with cross-functional groups, or through desktop presentation materials (Quirke, 1998). This experience taught the company that communicating to the bottom level of the organization meant speaking in simple terms, as the rate of illiteracy measured among its own employees was around 30–40%. Consequently, business plan presentations were abandoned in favour of sessions focused on customers. These consisted of in-store presentations made by store managers using graphic desktop presenters, as well as ad-hoc sessions designed to fit the pressures of the working day. Communication became more effective through the use of plain language and the involvement of shop managers in the process. The company also deliberately avoided complex management speak in order to reflect ease and simplicity — two important characteristics of the Tesco brand: "simple, down to earth, honest folk."

The technological dimension of communication is also essential, particularly in a company with cross-border operations and a large workforce. The retailer uses several communication channels — including email, mail, and presentations — and is keen to use each efficiently. One example is its approach to email use within the organisation. Given the size of its workforce, the misuse and abuse of email was previously creating problems by generating a high volume of misdirected messages. A campaign was launched to raise awareness of proper email use, and humorous booklets were distributed to staff explaining simple guidelines for using email effectively. Follow-up research indicated improved email usage (RY Case Studies, accessed January 2009).

Campaign Design and Logistics

An internal communication campaign should contain at least three elements: the logistics (channels and systems), the content of the communication, and the people responsible for transmitting that content. The intended receivers of the communication are all of the company's employees.

To manage logistics effectively, the company should diversify its means of transmitting information to employees while keeping communication costs under control. The available channels include the following:

Letters — A means of sending communication that does not require immediate receipt. However, mail services can be unreliable, and in international locations translation work would be required, substantially increasing costs.

Email — A fast and low-cost means of communication. Costs are primarily related to intranet maintenance and potential translation at international sites. However, if content is designed locally, translation costs are expected to be lower than for letters.

Business location and store presentations — An efficient way to transmit corporate messages in terms of assimilation. However, managing a large number of locations can make this resource-intensive. For optimal efficiency, such presentations should be delivered by store managers who know their staff best and should be adapted to the educational level of the audience.

Fax — More suitable for a smaller audience, as it is fast and reliable, but costs scale proportionally with the number of recipients.

Phone — Like fax, better suited to a smaller audience due to cost, but faster and more reliable. The risk of a message not reaching the recipient is lower and the reach is wider.

Internal memos — Can be distributed in printed or digital format. Memos are informative and typically contain details about the company's products, helping employees engage more effectively with customers.

Reference List

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Kimmel, P. 2000. Culture and Conflict. In Morton D. and Coleman, P.T. eds., The Handbook of Conflict Resolution: Theory and Practice. San Francisco: Jossey-Bass Publishers: pp. 453–474.

Korea Institute for International Economic Policy. 2005. Case Study of Samsung-Tesco, Korea. Peterson Institute, www.petersoninstitute.org

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