Store Labor and Role Transformation
A New Era for Retail Store Associates
by Tricia Gustin and Rob Oglesby
These driving forces in the retail landscape are pushing retailers to assess and modify every element of their businesses: brand strategy, merchandising, supply chain, store operations, customer service and more. A critical component of these changes is the evolution of a company's most valuable assets: its people.
The Parker Avery Group has pulled from years of experience and some of the most forward-looking minds in the industry to present our perspective on how the role of the retail store associate will change to support new retail environments and demands. In this Point of View, we explore the changing roles and expectations of store employees: what these changes are, how to incent staff and drive good behaviors, and how to effectively integrate millennials into the workforce as well as leverage their skills and capabilities.
Much of the intricacy in transforming a group of stores to support an integrated channel (or "omnichannel") environment and to address the many dynamics impacting retail today is the considerable effort associated with labor. Once systems have been selected to enable new capabilities such as fulfillment and customer service, the organization should undertake an extensive analysis of how to best integrate these capabilities into the framework of the stores.
The graphic shown on the left represents the mindset that must be present from the beginning: to truly embrace any new business model, the organization must enable new capabilities, not simply add tasks for the stores. Buy-in from store employees will be especially crucial in a new environment, and as we discuss later, these changes add complexities to training, compensation and incentives that must be thoughtfully handled.
Is a new department or dedicated staff needed?
The short answer is "no," the long answer is "maybe." Larger retailers have the benefit of size in their staffing models and typically have better capacities to absorb responsibility changes in their store personnel. Smaller retailers, perhaps already operating with a minimal payroll budget, may need to add headcount if new omnichannel responsibilities cannot be met with existing staff and hours. Further, the complexities of new government legislation also mean that companies need to be especially vigilant when selecting a mix of existing vs. new hires to ensure each location has appropriately skilled and trained resources to meet customer expectations.
Who is best to oversee and be in charge of these changes?
The most ideal focus groups for learning and role changes are store leadership and associates, and typically the best program sponsor is a member of senior leadership who has solid partnerships in the company's human resources organization. While some changes driven by new retail business models are focused solely on the store, changes required to support omnichannel may be some employees' first experiences that not just impact, but link many areas of the organization. This linkage requires a cross-functional approach and support for implementing the changes.
Many corporations get in the habit of consistently utilizing the same stores for feedback, due to proximity to the home office, strong operational performance or other reasons, and it causes self-fulfilling prophecies and skewed responses over time. For example, the associate being asked to test his fourth system or "umpteenth" new process has become used to change, and will potentially adopt and adapt sooner than others without this same type of exposure. It is recommended that retailers take a more broad approach in determining sources of feedback for new initiatives.
As role transformation moves forward, consistent procedures for communicating and executing changes, as well as for soliciting feedback, should be employed across the organization – with VP, regional / district and store leadership informed and able to support each other through the rollout. Without thorough planning, communication, testing and support, retailers risk low adoption rates, reduced productivity, lower customer satisfaction and overall increased costs.
Delivering on Customer Expectations
Few roles in the retail environment have the ability to impact sales, shrink and customer service simultaneously like an employee who handles products and interacts with customers. In an omnichannel environment, this becomes more complex, as the check and balance of the actual customer being there becomes less concrete. In brick-and-mortar stores, many uncertainties associated with online shopping are minimized or eliminated, for example product availability, payment confirmation, delivery times and quality expectations. However, in an omnichannel business model, these uncertainties can still exist until the customer actually receives the product and their payment is confirmed.
To reduce this complexity, roles that are added to support new retail business models need to have the following:
• Funding independent of other tasks (at least initially). To clarify, funding is usually done by area of the store. Division of this funding by employee and task is generally left to the store leadership. As such, "funding independent" means that new roles need to have their own set budget, and not be labeled under something else like "customer service" or "back room" where the hours could be mismanaged.
• Funding to the desired level of success, not to the minimums required to execute the task. As an example, just because the fastest "standard" time to do a certain task was determined to be one hour, does not mean everyone can complete it accurately in the exact same time. If the same task takes an average of two hours for any employee do it correctly and have a perfect (or acceptable) success rate, then that task needs to be funded at two hours.
• A dedicated support system to resolve store-level system and personnel issues.There should be a dedicated "help desk" style process, personnel and supporting systems for store employees – similar to customer service support. This should include contact and feedback methods that are clearly communicated so that any issues identified by store staff can be quickly and competently addressed.
• The understanding that all store staff plays a role in customer service. Store teams need to understand that regardless of their primary job duties, they share the obligation of delivering on customer service expectations. Even if an associate is in a traditionally non-customer facing role, when a customer needs help finding an item or reaching something – then that associate is expected to deliver on that service level.
Don't let advancing in one area cause a lack in another. Parker Avery explores this changing role of retail employees and the critical need to cross train in our research study: Channel Integration in the Store.
It is absolutely vital that concrete metrics are built into staff roles and responsibilities, not just relative to the company's success, but also for the employee review and rating process. While metrics are a time-consuming element of role transformation, employees (and managers) should know exactly how their jobs are measured and how to achieve the company's expectations.
Employers need to define "what a good job looks like" in a manner that can either be added to an existing employee review program or used to create a new one. This expectation must be clearly communicated and understood by employees from the vey beginning. There is a long-standing sentiment that says: if the review is a surprise, you've done something wrong.
Employee reviews and metrics should at a minimum cover these key areas:
|– Time and Attendance||– Order Fulfillment|
|– Customer Experience||– Shrink / In-Stock Metrics|
In an integrated channel environment, there is the unique onus to incorporate many factors, which can complicate employee measurements – especially when employees are cross-trained. The correct balance must be struck to ensure the "right" metrics are aligned with the right store roles to ensure all employees are set up for success. Many retailers tend to tack responsibilities onto roles without first carefully ensuring measurements are defined and aligned. Metrics undoubtedly warrant close scrutiny, especially as retail walls become blurred and roles now so easily cross traditional boundaries in support of company objectives.
Incentives: Compensation, Motivation and Competition
One of the largest complexities within the scope of managing labor in a new retail environment involves incentives – in particular changing incentives to drive new and better behaviors and to motivate staff to learn new skills. This goes beyond traditional commission or reward structures employed by some retailers. Further, cross-trained employees need to receive recognition or feedback in a formalized way – even though it may not be relative to their primary job function. This concept underpins the importance of employee expectations and buy-in: if an employee understands and values the incentives associated with their role – even those that are non-monetary – they will be more effective in their jobs.
The above graphic portrays the disconnect between employee expectations and employer opinions. These findings should be considered when revising roles, responsibilities, metrics and incentives. Studies show that employees deliver an average of 22 percent increased performance with good incentives – and this can rise to as much as 44 percent when team incentives are included. Compensation should be in-line with the company's strategy and market position, but clearly and transparently tied to the tangible success measures of the position. From there, the company must define and clearly communicate the benefits of meeting or exceeding job expectations.
When it comes to new initiatives that impact store-level staff, some of the most important questions to answer are:
• How will this program affect employee compensation?
• Why should the staff care about the outcome?
• How will this new process, policy, tool or procedure help improve performance?
As an example, let's look at sales and returns. Sales generated through in-store customer service and fulfillment work should be attributed to that particular store, and if systems allow, to the specific employee that assisted the customer or fulfilled the order. Stores need to receive credit for their efforts in a manner that allows for recognition, coaching and tracking. Likewise, returns should be able to be handled at the store from which they were fulfilled or at any location. Ideally, a sophisticated POS system would be able to track and attribute the return to the store of origin, however this is often not the case.
It is the job of district and regional store leadership to note and account for stores that are functioning as "return centers." Centrally located, isolated or dense metro locations typically absorb more returns due to the convenience of their location compared to other stores, and will require labor budget adjustments to ensure service levels do not suffer. Such adjustments will help prevent the issue of stores receiving less payroll dollars (by factoring net sales into their labor budgets) and doing more work by taking returns.
This equation of labor budget allocation, compensation, rewards and the supporting metrics will differ among retail models, but the end result should be that all roles and responsibilities should transparently support success at the store, regional and company level. Furthermore, employees must clearly understand how their individual role and the tasks they perform fits into this equation and how their performance impacts success – for their own benefit, as well as the company's.
Motivation does not need to be overly complicated or overly done. What it should be is timely, relevant and heartfelt. Tangible motivation can be a bonus – a handwritten note can go a long way. Another great way to motivate and support store-level omnichannel capabilities is to make every opportunity an educational experience. People generally love to learn, but few love to train. Retail managers should make it a point to teach at least one of their subordinates something new, every day. The staff will appreciate it, and managers are positioned and looked to as knowledge givers.
Attitude is also a key motivator. Managers and leaders who arrive to work with a positive attitude and are committed everyday will set the tone for their teams. Finally, they must understand the value of their people and the huge impact that the workplace has on employees. The store environment may be the only source of positivity, feedback and success for some employees, and when treated well, they can become lifelong ambassadors for the company.
Another effective way to drive results is through healthy internal competition among peers. Most importantly, competition should be simple and relevant. It should also have some type of "leader board" with consistent status updates – this is absolutely critical to maintaining employee interest and motivation. In creating the competition, it is also important to remember: the prize is not as important as most people think it is. While it is key to make the prize relevant and seen as valuable, it is only one part of the overall competition.
Once the competition has been framed and the prize(s) determined, area leadership should be informed and invited to support the momentum and create enthusiasm. The more involved and aware the organization, the larger the buy-in will be for the affected team, in turn driving better results. Additionally, this can serve as an opportunity for informal education – for example, best practices on selling a product or service offering.
It should be noted that internal competitions must be carefully structured to avoid negative or unwanted behaviors – the kind that puts individual glory over the greater good, which can be deadly to trust and collaboration. While acknowledging that there will always be winners and losers, the end game should be that all employees involved in the competition benefit from their genuine efforts in some way that is valued, yet the "star" performers or team are uniquely recognized.
As the competition draws to a close and the winners are recognized, the competition owner should solicit and document the combined learnings to make future competitions even more relevant and successful.
Millennials: The Future (whether you are ready or not)
Millennials, or those born between 1980 and 1995, have often been subject to categorization, and sometimes demonization, regarding workplace habits and work ethic. Conversely, they have also been praised as visionary thinkers, complex problem solvers and empathic workers who can relate to and provide "above and beyond" customer experiences.
The infographic to the right illustrates some strongly held beliefs of the millennial generation. These attitudes provide some insight into how millennials should be handled in the workplace and how they represent a much different mindset from traditional, structured ways of managing staff.
Organizations that are early adopters to change in the workplace will be the winners; moreover, companies who are not already successfully recruiting, nurturing and retaining millennials are living on borrowed time.
Hiring and Retaining Millennials
The current feeling in the retail industry is that millennials are unprepared and entitled – and if "unprepared" means "not ready to come in and do the same job their predecessor did from 9-5 over and over," that definition would be right. However, no generation has ever been more educated, more technologically savvy, and more able to come up with creative and often crowd-sourced solutions rapidly and effectively. Millennials are upwardly focused, almost to a fault, and believe wholeheartedly that their ultimate success or failure will be determined by the work they do. Leveraged correctly, they can be a powerful addition to an organization. Mismanaged, however, and millennials can leave a gaping talent gap over the next 10 years.
Earlier we mentioned early adopters to change in an organization would be ahead of their competition. That being said, the list of "adoptions" is not vast, however it can be complex. First, when it comes to productivity, different does not mean less. Effective time management and flexible schedules will support positive work life balance, and integrated technology means that productivity does not have to suffer.
Secondly, incentives, rating systems and reviews need to be transparent and fair – arbitrary bell curves are an anathema to the millennial generation. This is also an area in which employers need to be open minded and willing to listen to ideas for improvement within the system. Long tenured leaders sometimes view structures such as reviews as rigid and unchangeable – that it is the job of the new person to adapt. This is not incorrect, but companies who are not open to change and to different ways of attaining the same objective will risk losing both a great idea and a great employee.
Finally, companies must remember that millennials feel valued in many ways other than pay – and value those things greater. Millennials will often work longer and harder to achieve a goal, so long as the reason is not "because that's the way it's always been done." Taking the time to stop by and deliver a compliment, a note, or take them out to lunch will convert them into power brand ambassadors as well as driven employees.
The key to integrating millennials into the existing workforce, as well as supporting older generations in their role transformations involves leveraging complimentary skill sets. Through creating a culture of growth and change, employees should never feel like they are being replaced, but instead be paired up as often as possible to foster teambuilding and skill sharing. The best thing a retailer can do is to instill a workplace of mutual respect, created through learning and common goals, and celebrated by leadership at all levels.
Retailers should take notice of older generations and the impending impact their absence will have on the retail labor pool. According to The Sloan Center on Aging and Work at Boston College, "employers in the retail sector may not be prepared to know how many workers they could be losing with the impending Boomer retirement." Evidence indicates that less than 20% of retail organizations have assessed the demographic make-up of their workforces, and only about 15% have assessed projected retirement rates to a moderate or great extent, compared to employers in other industries. This finding indicates an even more desperate need to attract and retain workers of all ages, as these older generations begin to retire in droves, leaving a potentially large labor pool gap.
The omnichannel environment is one of numerous nuances and exciting change. Customers are dictating the terms of their engagement and share of wallet more than any time in history, and retailers are tasked with not only delivering, but also in differentiating themselves in this complex marketplace of interactions. The capabilities of the retail staff in an omnichannel environment will become as important to the retail business as POS systems are now. Through understanding and accounting for their most valuable assets – their people – retailers can have thousands of positive customer touch points and deliver the experiences that will drive their success for years to come.
If you’d like to learn more about our vision or understand how you might take advantage of this strategy, contact us at Contact@parkeravery.com or call 770.882.2205.Download PDF Version (1.7 MB)