Dave Lewis, the new CEO of Tesco, has a problem: What to do about all the unpaid overtime Tesco’s 500,000 staff are working.
“The pressure and stress of having to do extra unpaid hours has killed morale and colleagues have had enough of working for free,” one Tesco worker tells Business Insider. “Personally I have a contract for 37 hours per week but end up doing a minimum of 65 hours.”
Business Insider recently invited workers at Tesco, Britain’s largest supermarket chain, to tell us how they would advise Lewis on fixing the ailing grocery giant. We received a bunch of emails from Tesco staffers. Six of them mentioned, without being prompted on the issue, that they or their staffers were required to work unpaid overtime.
Tesco tells Business Insider that the company is committed to paying its workers properly, and staffers who feel they have not been paid for hours worked should talk to their personnel manager. “General assistants” at Tesco get £7.39 per hour. A Tesco spokesperson said: “We’re committed to being a great employer, ensuring colleagues are paid correctly is very important to us. Occasionally issues do arise and we aim to resolve these as quickly as possible. Our colleagues can always approach their personnel manager to discuss any concerns they may have.”
We cannot say that Tesco systematically underpays its workers. We have only anecdotal evidence: The staffers who emailed us all work for different Tesco sites in different parts of the country. Although this is obviously not a random sampling — these are people complaining about Tesco, after all — it struck us as an amazing coincidence that six different people at six different stores would all mention that they worked overtime and didn’t get paid for it.
And while you can write these sources off as disgruntled employees, the tone of their emails was the opposite: They loved working for Tesco, they have worked for Tesco for years, and they want to see the No.1 grocery brand take back its throne of excellence. They don’t want to leave Tesco — but they do object to working for Tesco for free. This is a company with annual revenues of £71 billion ($121 billion) after all.
Falling sales at Britain’s largest non-government employer
Lewis, who started his new job earlier this month, had invited Tesco’s 500,000 employees to tell him directly via email what they thought he should do to turn Tesco around. Sales fell 4% through Aug. 17, 2014, and Tesco has revised downward its profit projection for the year. Tesco also cut its dividend, and the stock has fallen 32% in the last year.
As a result, Lewis is likely considering cutting costs and laying off workers at Tesco in order to get profits rising again. He did that at Unilever, his previous employer, where he cut costs by 40% in part by laying off 300 people.
That would be a serious issue, because Tesco is both Britain’s largest non-government employer, and Europe’s largest company employer. Redundancies at Tesco would thus have to number in the thousands to make a difference.
Then there is the question of what effect cutting staff would have on the overtime situation at Tesco. Without concomitant store closures, a reduction in staff could mean the remaining staff might be asked to work longer hours, exacerbating any existing unpaid overtime problem.
“It’s a common occurrence for managers to work 12- 13 hour days.”
“One of the long term sick managers I mentioned is off sick from collapsing in the store and being taken away in an ambulance after been consistently being made to stay 3-4 hours after a 9 hour night shift (22:00 – 07:00),” A Tesco worker told Business Insider. “Also it’s a common occurrence for managers to work 12- 13 hour days but we are contracted for ’36 hours and any additional hours that are reasonably required to fulfil your role,’ so it’s a moot point.”
Worse, if unpaid overtime was widespread at Tesco, and Lewis chose to do the right thing and award staffers their unpaid back pay, that would make Tesco’s wage bill go up — and put further downward pressure on profits.
So what should Lewis do?
Our sources inside Tesco were almost unanimous on this point: They believe Lewis should increase the number of workers per store. This, obviously, would reduce Tesco’s profits further in the short-term. But our sources say it might increase revenues in the long term, too, by allowing Tesco workers to properly serve their customers.
“It is almost impossible to deliver the level of service that we would like,” A Tesco staffer who works for the delivery service tells us. “Everything Tesco does seems to be designed to piss the customers off rather than make them stay with us.”
“Please do not reduce staff anymore.”
Another — addressing Lewis — said, “Please do not reduce staff anymore. We cannot cope with tasks and have to do extra hours to complete these most of the time unpaid, especially the team leaders, but staff do this as well, we have to support more than one area especially checkouts so this affects our own department, and especially the service of customers which we know is important.”
As customers, we know that staff help is crucial in generating sales. How many times have you walked out of a store frustrated because you could not find a staffer to help you locate an item? What is not clear is whether spending more on staff and wages also generates more sales.
A rival supermarket has already solved the problem
To answer that question, Lewis might want to look at one of his competitors (which also has the same last name as him), John Lewis. The John Lewis department store group also owns Waitrose, an upscale supermarket which has taken market share from Tesco.
The main difference between John Lewis and Tesco is that John Lewis is a partnership of its own workers, a unique experiment in industrial democracy. All 91,000 John Lewis workers own an equal share of the company’s profits. They are literally working for themselves. (In the U.S., Tesco’s Lewis might also want to examine Costco, the discount chain that famously pays its workers more than its rivals.)
Anyone who shops at John Lewis knows you get the best service. It’s impossible to walk through one of those stores without being ambushed by staff who want to help you. Staffing is not an issue.
Last year, revenues at John Lewis were £10.2 billion, up 6.6%. (Sales at Waitrose specifically were up a similar portion, 6% to £6.1 billion.)
Note that John Lewis’ sales are going up while Tesco’s are sinking.
Here, in their own words, is what Tesco workers told us about unpaid overtime:
Worked for Tesco for 11 years: This happens constantly, staff are asked to work to support sickness / holidays for time back but this proves difficult as staff are so thin on the ground it’s hard to do without another. Staff find they’re working a full shift in one go and taking an hour back here & there, especially night shift. Overtime is a rare thing & has been for quite some time. Staff work through breaks just to try & catch up. We have had at least 6 long serving staff members, most full time, leave this year alone & not had their hours replaced.
Tesco Express worker: Queues are getting worse because of no staff and the moral is at it’s lowest and the store availability getting worse cause no one to fill the shelves. The store manager literally works every day of the week just to keep on top of all the paper work and store running! none of our management team get there breaks ever!! And end up working 12 hour shifts but only paid 7.5!!
Non-food trading manager at a Tesco Extra: We are given budgeted hours by the centre which tells us how many hours we need to deliver a great customer experience but are never allowed to use the hours. Most of my departments are horrendously under contracted and when this is brought up my Store Manager simply refuses to do anything about it because, he claims, his hands are tied! The pressure and stress of having to do extra unpaid hours has killed morale and colleagues have had enough of working for free. Personally I have a contract for 37 hrs per week but end up doing a minimum of 65 hours.
Worker at a Tesco.com store in the south of England: I work with a great bunch of drivers, but there are so many restrictions being placed on us that it is almost impossible to deliver the level of service that we would like. Everything Tesco does seems to be designed to piss the customers off rather than make them stay with us. We have too few pickers and too few drivers, and have done since the start of the year. The rest of us are made to feel guilty about not delivering all the shopping but it is their fault for not giving us enough staff. We are all expected to work 6 or 7 days a week and get told off if we complain. We have no rights any more and are all getting so fed up with it.
Worked for Tesco for 25 years: Please do not reduce staff anymore. We cannot cope with tasks and have to do extra hours to complete these most of the time unpaid, especially the team leaders, but staff do this as well, we have to support more than one area especially checkouts so this affects our own department, and especially the service of customers which we know is important.
Tesco manager for eight years: One of the long term sick managers I mentioned is off sick from collapsing in store and being taken away in an ambulance after been consistently being made to stay 3-4 hours after a 9 hour night shift (22:00 – 07:00). Also it’s a common occurrence for managers to work 12- 13 hour days but we are contracted for “36 hours and any additional hours they are reasonably required to fulfil your role” so it’s a moot point. We’re overpaid colleagues unfortunately as we’ve no staff to actually manage.
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