The retail model in the public sector

The problems experienced by Tesco and the response of the board has a lot of parallels with NHS Trusts and Local Authorities. This isn’t surprising since the public sector has been encouraged to adopt the retail model.

The financial and business press described it as “brutal". The announcement of his departure was sudden and unexpected. His replacement was already lined up. The loss of his post came as he was preparing to celebrate his 40th year at the company with a party in central London. The party was cancelled. Philip Clark began working at Tesco as a school boy shelf -stacker and for the last 3 years had been CEO. The finance press speculated that Tesco’s had long standing problems which had made it less competitive, it had become over stretched, failed to invest and been slow to change the way it did business. All of which sounds very familiar to anyone who works in a local authority or an NHS trust.

The board may think the message they have given is one of taking decisive action, ensuring a swift transfer of power, appointing someone with the experience and skill to solve the problem as they see it, that of making it clear what Tesco "stands for". But the message that has been received by staff and observers is if we can dispense with the long serving CEO so brutally we will have no qualms about dealing with anyone else who does not fit in with the new way. Loyalty counts for nothing, the old way of doing things is the wrong way, expect increased reports of management bullying. The new man's background is not retail but branding. Expect him to set to work on building the Tesco brand.

Staff moral will plummet, managers will leave, a new senior management team will be appointed, staff will complain about the money spent on a few flagship stores and millions on advertising whilst they work in shabby stores, short staffed and under paid. Staff in stores will have their ideas about how things could be improved and customers retained but it won't have anything to do with branding and it won't have much chance of being listened to. There will be much talk about "reputation management” and the newly appointed head of corporate communications with their enlarged team will ensure the right message gets across. It is of course about a cultural change and the senior management team will come to realise this takes years not months which is why the new CEO will not be around to see it.

How do I know all this? It doesn't matter whether it is a supermarket chain, a Local Authority or an NHS trust the same broad agenda is followed with the same broad outcomes. Hardly surprising since the retail model dominates the public sector. When they are financial driven rather than practise led people and organisations tend to behave the same whatever the business.

Blair McPherson author and commentator on the public sector  



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