If there’s one thing Tesco’s reporting meltdown tells us, it’s that the only way to stay profitable is to be open, transparent and accountable – without trust, profits are in trouble.
The news that Tesco botched its financial reporting to the tune of £250m, and saw large amounts wiped off its share value since Monday 25th September, means that change is now inevitable at the large retailer. As well taking a look at the way it reports its supplier financials, leadership now has to step up and play a vital role in restoring trust and accountability and confidence amongst employees, consumers and investors.
There now seems to be a need for transparency and open, honest behaviour and that must come from the top. Now is the time for leadership to be heard.
A culture of open and honest dialogue
There is sometimes a tendency to mis-report when times are tough. Add to this, suppliers and other commentators have recently spoken out about how Tesco managers tend to report supplier profit. In this context, open and honest exchanges may not be the norm. There might be a tendency towards ‘presenting’ the picture stakeholders and leadership want to see, rather than a difficult reality. This situation might thrive in a retail environment unless it becomes acceptable to admit failure or to raise a hand over concerns. The task here is for leadership to have open and honest dialogue and set this type of communication as a defining feature of Tesco’s culture. Admitting failure is not a bad thing in business. Leaders must really listen to what employees are telling them and act on feedback.
Living the values
There will be some tough decisions about supplier management and subsequent reporting, but whatever changes Tesco makes, leadership is now tasked with restoring trust and belief amongst stakeholders and employees. Talking with conviction and passion about the values that Tesco must hold dear to preserve integrity will set the tone for behaviours throughout the company. Leadership sets the precedent for behaviours and must live and breath the values it wants to see demonstrated by everyone.
Presence and accessibility
It can be tempting, even for those at the top, to hide away but their ears need to be to the ground and they should work closely with internal teams, especially Communications, to ensure they have visibility and are giving employees the big picture and a way forward.
Tesco’s predicament shows us that companies that are not honest and transparent endanger their ongoing success. Leadership always sets core values and the question is whether, at Tesco, it will step up its presence and convince people.