I recently read a report titled ‘The Two
Faces of Tesco.’ It is about following different policies, actually
diametrically opposite policies, in two different countries where this MNC
operates. And it makes very interesting reading.
Tesco is a huge retail giant. It is UK
based. Tesco has a small presence in India and has tied up with Tata Group to
open more stores. It has a market share of 30% in England. Tesco is a big
success story in England.
Tesco is a respected organisation in
England for another reason. It is the second largest retailer measured by
profits. It donates almost 2% of its pre-tax profit for Corporate Social
Responsibility work. That is a very sizeable amount. It is the largest private
sector employer in UK. It employs 2,80,000 people in UK. This is what their
corporate website says:
“Our Core Purpose needs to reflect how much
society has changed in recent years – more scepticism about corporations, more
desire to see business demonstrate it has a purpose beyond profit, a sense that
large companies should be contributing more to tackling some of the big
challenges. The world has changed from a culture of ‘more is better’ to ‘making
what matters better’.
That’s why we’ve changed our Core Purpose
[Note: There were different values mentioned earlier when the American union
prepared its communication.] - this profound shift in society must be reflected
in the way we think and behave as a business. Today, our brand must be about
more than simply function. It’s about the way we work, the values we live by,
the legacy we leave. We can’t solve the world’s problems but we want Tesco to
always do the right thing, to inspire and to earn trust and loyalty from all of
Our new Core Purpose is: We make what
matters better, together.”
Tesco has excellent relationship with the
UK union called Usdaw [Union of Shop, Distributive and Allied Workers]. The
Tesco-Usdaw Partnership is the biggest single trade union agreement in the
private sector. It has contributed significantly to the good employment
practice in Tesco. Senior management recognises that employee involvement and
participation in decision-making can contribute to the achievement of strategic
So we are talking about an organisation
which is huge in size, exceptionally successful in financial terms and has
practised and preached partnership with union.
It entered the US market in 2006 and there
was a disaster. The US operations have bombed. There is a huge loss and they
are selling it off in US. The union in US is UFCU or United Food and Commercial
Workers International Union. This union has published a report which is called
‘The Two Faces of Tesco.’ This report essentially attacks Tesco for following
different policies in UK and USA. Quoted here is a part of introduction to it
by Joseph T Hansen, International President of UFCW:
“We knew about Tesco’s ground-breaking
partnership agreement with our UK counterpart trades union, Usdaw, and were
impressed with what it said about bringing supermarkets and jobs into some of
our more deprived communities.
We were ready to strike a constructive
partnership with Tesco, to help it to succeed in the US marketplace, when all
who had come from the UK before had failed.
But this was not to be. Because, hidden
behind its fine policies and responsible public face, we have glimpsed another
Tesco. Instead of engaging positively with community partners, it refuses to
meet with them. Instead of offering partnership, it accepts conflict. Instead
of defending freedom of association, it actively pursues a policy to keep out
The UFCW is now at the forefront of a
campaign in the United States to get Tesco to engage with its stakeholders, and
we are joined by respected community groups which are appalled that a company
with Tesco’s reputation for corporate responsibility could, in our view, act
with such arrogance in its newest market.
Tesco seems to think that it can succeed in
the US marketplace alone. Yet sales estimates from analysts suggest that Tesco
Fresh and Easy stores may be struggling, as they believe there are too few
customers. Expansion is on hold and the company is falling foul of planning and
environment regulations and has been unable to obtain liquor licences for some
stores. Things are not going to plan, and they will not get any better while
Tesco continues to show such a stony face to its US stakeholders.
The UFCW and other community partners have
repeatedly requested the opportunity to meet with Tesco and its US management,
and were repeatedly rebuffed while the company planned and executed its US
launch – as a non-union company. It is clear, in stark contrast to what Tesco
does in the UK and says about corporate responsibility that it has two faces:
one for its UK public and investors, and another for other parts of the world.”
This report ‘The Two Faces of Tesco’ goes
in great detail to point out the difference in approach to partnership with
unions in UK and USA. This is not where it stops. Tesco is also accused of
similar practises in Turkey and Thailand.
Interesting? Not exactly unfamiliar
situation for people in India.
Labels: Industrial relations, TESCO, Union Recognition