Transforming Retail Workforce

Transforming the Retail Workforce

to Achieve High Performance

by Teri Babcock and David L. Reed

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Teri Babcock is a partner in Accenture’s

Retail practice. She has worked with

clients in the human performance,

talent management and learning

space for more than 17 years.

Teri can be reached at

[email protected].

David L. Reed is a senior director in

Accenture HR Services. He has led

Accenture's external and internal

recruitment business for 17 years.

He posseses extensive experience

across all strategic and operational

aspects of recruitment across multiple

clients, industries and geographies.

David can be reached at

[email protected].

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Hiring the Right People:

Human Capital Sourcing and Staffing

1

Retailing is the preeminent day-to-day

business enterprise. The focus on the

latest numbers is intense: How many

associates are available next shift?

What was store traffic last weekend?

How will we train associates on the

new products that arrive tomorrow?

What are our sales this month? Store-

level execution moment-by-moment

makes or breaks the enterprise.

What, then, should retail executives

make of these decidedly long-term

data points?

• The workforce in the United States

will expand by only three percent

from 2000 through 2020, as com-

pared with a 53 percent increase

over the 20 years from 1980 to 2000.

• The number of young European

workers, those aged 20 to 29, will

decrease by 20 percent over the

coming two decades, while the

number of workers approaching

retirement (aged 50 to 64) will

grow by more than 25 percent.

• Japan expects to lose 10 million

workers, or 16 percent of its work-

force, over the coming quarter-

century. One in five Japanese is over

the age of 65, the highest ratio

of seniors to citizens in the world.

These statistics suggest that one of

retailing’s most venerable fixtures, the

retail workforce—the people behind

the counter, at the checkout station, in

the stockroom—is already undergoing

dramatic change. This change may

threaten or undermine many retail

enterprises. Accenture believes,

however, that for visionary companies,

the unique workforce dynamics at

work in the retail marketplace create

a significant opportunity to achieve

high performance.

Accenture High Performance Business

research shows that small improve-

ments in key talent management

performance indicators such as

attrition, speed to competence and

associate performance can drive

disproportionately large improvements

in customer satisfaction and financial

performance. This paper explores

opportunities for transforming retailing

associates into a high-performance

retail workforce by focusing on

three key talent management levers:

recruiting, learning and performance

management.

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2

Selection processes

of high-performance

companies

Successful retailers have human capital

strategies designed to ensure that the

right people and the right capabilities

are in place to execute the business

strategy effectively. What all effective

enterprises have in common is a

mature process for formulating and

aligning human capital initiatives with

business strategy. These organizations

make clear priorities and track their

people and workforce programs based

on the business value they create.

Imagine a manufacturing process

where companies had to manufacture

150,000 parts in order to end up with

1,700 parts of acceptable quality. Yet

this is exactly the yield from most

recruitment processes. Even in the face

of this extremely inefficient process,

HR departments often feel manage-

ment pressure to increase the pool of

potential workers. We believe that

smart hiring is not a recruiting prob-

lem; it is a selection problem.

Companies do not need to increase

the pool; they need a better yield.

One of the biggest hiring challenges

retailers face today is the disconnect

between new job profiles and a

recruiting process that too often hires

based on old profiles and inconsistent

selection techniques. For HR depart-

ments in retailing enterprises, new

selection techniques and technologies

offer significant opportunities. Instead

of relying on the hit-or-miss tactics of

traditional recruiting, these new tech-

niques and technologies can be used to

match new job profiles—and the per-

formance characteristics of the workers

who are the highest achievers—against

potential worker pools.

Some retailers are creating simple yet

ingenious responses to the challenge of

smarter selection. Consider the practice

of one European retailer that requires

that a prospective employee must work

in the store he or she will be assigned

to for one trial day before being hired.

Expectations are explicit, and after

the trial is complete, the staff of the

store votes on whether the prospect

gets the job. The approach has yielded

impressive results for a chain that

relies on quick, efficient service to a

high-end clientele for its success.

Basic hiring practices for retailers have

not kept pace with the actual perfor-

mance environments in which workers

find themselves. As a consequence, HR

departments searching for the best

people are getting “false positives”:

workers that appear on paper to have

the skills to succeed, except that the

“paper” contains out-of-date perfor-

mance criteria. Just as worrisome,

HR professionals are also getting false

negatives: they are failing to hire

workers with the right backgrounds

and skills to perform optimally, because

the HR department is not aware of

the change in the definition of optimal

work performance.

Accenture takes the view that retailers

should:

• Re-tool their recruitment and

selection profiles based on analyses

of the performance of the most

successful workers in the current

work environment.

• Apply that profile and those perfor-

mance characteristics across the

company’s basic core processes.

• Use next-generation technologies

and tools in the selection process to

reduce both false positives and false

negatives among potential workers.

• Push the biggest part of the filtering

to the front end of the process—

before more costly human analysis

is applied to selection—and let

insight-based applications help pre-

dict those applicants most likely to

respond to and perform well under

updated performance conditions.


3

A simple start toward high performance

Many retailers are challenged to identify the specific problem

areas for their key workforces, or to prioritize initiatives to

address workforce issues. Based on our extensive experience

with companies around the world, Accenture believes that

when organizational energy is focused on two to three criti-

cal workforces, even slight improvements can make a 10 to

15 percent difference in the company’s bottom line.

For example, the retail division of a major US bank calcu-

lated that every time it cuts a single second from call

handling time, it adds up to US$1 million in savings for the

bank. A global insurance company with 16,000 life planners

in Korea found that a one percent change in a single measure

—growth in written premium per life planner—translated

into a US$16 million improvement for the company, most

of which was pure profit. These incremental improvements

are the quick hits that will put the enterprise on a path

toward high performance.

While each retail organization will have its own challenges

and opportunities, consider these six steps for getting

started:

1. Identify the two or three most critical workforces

for your organization.

While retailers have a number of critical workforces, the

customer-facing frontline associates may provide the great-

est opportunity. In high turnover environments, explore

recruitment and learning strategies to improve speed to

competence. A floor salesperson who gets up to speed five

percent faster yields significantly superior performance in

terms of product knowledge and customer satisfaction.

Another critical workforce in retailing is buyers. No matter

how good a workforce is, if the wrong products are on the

floor, the store will fail.

2. Define what optimal performance looks like for

those positions.

Evaluate your top performers for each key position. What

skills and experience do they bring that differentiates

them from poor performers? From which recruiting pool

did they come? What previous positions did they hold in

your company?

3. Assess where capability gaps exist between current

and optimal performance.

Understand the gap between your top performers and others

to (1) identify better candidates and recruiting channels

and (2) tailor learning and development programs for entry-

level employees along a more cost-effective path to high

performance.

4. Develop a set of integrated talent management

solutions to address the workforce gaps.

Fundamentally changing—and sustaining—higher workforce

performance is a complex undertaking. Look first at how

selected HR programs can be integrated for a specific work-

force, rather than rolling out individual programs across

the organization. Results will likely show significantly higher

performance for that selected workforce than when programs

are implemented independently.

5. Define an overall human capital roadmap that will lead

to fundamental, lasting change in your workforce.

Include both “quick hit” initiatives, like targeted learning

programs, and long-term investments, like technology

or store infrastructure. Evidence suggests that quick-hit

savings used to fund long-term investments create

sustainable change programs that are more palatable to

company executives.

6. Implement and measure return on investment, making

calculated adjustments along the way.

Implementation raises several practical questions. What is

the appropriate frame of reference—the entire enterprise

or all retail locations? In Accenture’s view, retailers should

start with the box, the four walls of the retail location.

Start building a better workforce inside the box, which is

ultimately the profit-and-loss entity that counts. Measuring

progress and adjusting along the way is critical. Human

metrics are often perceived as soft and in a tight margin

business, CEOs do not invest where they cannot prove

a return.

Each organization will have its own unique journey. Yet

“leaders” in the human capital management arena display

certain characteristics in common, as shown by the

Accenture High-Performance Workforce Study, a compre-

hensive research program conducted approximately every

18 months with executives globally. For instance, the leaders

that emerged from this research tend to value human

resources and training more highly than do other companies.

The example of these human performance leaders suggests

that the integration of initiatives in recruitment, learning

and performance management—with a particular focus

on support provided to critical workforces—is the key to

transforming employee performance.


4

Once the right talent has been identi-

fied and recruited, how do you equip

them with the critical knowledge

needed to be high performers?

Consider the second key talent man-

agement lever—learning.

Learning has moved from the periphery

of public and private enterprises to the

center over the past decade. Individ-

uals know that their careers depend

upon their willingness to engage in

lifelong learning that can help them

advance to meet new challenges.

Retailers realize that unless their

people are fully competent to execute

strategy today and tomorrow, they

cannot achieve high performance and

sustain their competitiveness.

The transformation of the learning

function from a cost center to a

value creator can be seen in recent

Accenture Learning research, “The Rise

of the High-Performance Learning

Organization.” The study, which sam-

pled opinions from chief learning offi-

cers and other learning executives at

285 cross-industry organizations,

reveals in vivid detail the new demands

being placed on learning functions

today. The learning functions at most

of the organizations participating in

the Accenture Learning survey clearly

face heightened expectations to deliver

business value and prove the business

impact of learning investments. When

asked to name their most pressing

challenges, learning executives made it

clear that business impact was their

primary concern:

• Aligning learning activities with

the most pressing and important

business or operational needs.

• Measuring the effectiveness and

impact of learning on the perfor-

mance of the business or agency as

a whole.

• Proactively communicating the value

of learning to all stakeholders.

The Accenture Learning study contains

provocative evidence about the impact

learning can have on the business.

About 10 percent of the learning

organizations surveyed had levels of

performance that earned them the

title, “High-Performance Learning

Organizations.” The reason? Every

enterprise utilized innovative

approaches to learning, approaches

that tracked the impact learning has

on the business.

Learning and Knowledge Management:

Skills and Behaviors

that Drive High Performance


5

Analysis of survey data, coupled with

additional financial data from other

publicly available sources, has demon-

strated that companies with high-

performance learning organizations

returned better revenue and profit

growth compared to their competitors

and industry peers:

• Productivity (as measured by sales

per employee) was 27 percent

greater.

• Revenue growth was 40 percent

higher.

• Net income growth was 50 percent

greater.

These high-performance learning orga-

nizations show mastery in a number of

important capabilities, including:

1. Investing in learning according to its

impact on the business: aligning learn-

ing initiatives to business goals, mea-

suring its impact in business terms and

running the learning function itself in

a rigorous way.

2. A healthy percentage of technology-

delivered learning, with an emphasis

on “blended” delivery approaches that

include classroom as well as electronic

learning, and learning solutions that

build upon knowledge management

and performance support functionality.

3. Movement of learning outside the

“four walls” of the organization to

include other members of the overall

value chain such as customers and

channel partners.

4. Involvement of learning and perfor-

mance-enablement efforts during

major change programs and in support

of business initiatives.

Accenture Talent Interlock:

Executive leadership

and governance that keep

learning on track

Armed with evidence of the link

between world-class learning strate-

gies and business results, leading

retailers are looking for ways to ensure

close collaboration between those

responsible for the development and

delivery of learning content and the

company’s senior management respon-

sible for establishing business goals

and objectives. This collaboration is

too important to be left to chance, or

to simply “keeping management

informed.” Retailers need a more

formal organizational structure and

system of governance to ensure that

strategy and workforce enablement are

“locked in.” Accenture has developed

this reporting and governance process

in Talent Interlock, a proprietary

process with services, interactions,

metrics and application capabilities

that link learning outcomes to business

objectives.

Accenture Talent Interlock operates on

a few critical guiding principles:

• Ensure the involvement of senior

executives in the planning process

regarding the specific learning

programs that can achieve the best

business results.

• Facilitate an annual planning process

and quarterly demand forecasts

around learning demand, capability

and affordability.

• Establish a single point of contact

for all learning and performance

requests from the business.

• Structure more effective communi-

cation channels between the

business and the corporate learning

organization.

• Ensure participation of the learning

organization in the overall gover-

nance process.

Accenture Talent Interlock does not

simply add another step in the learning

supply chain of content sourcing,

cataloging, delivery and administration.

It transforms it in the same way that

new processes transformed the manu-

facturing supply chain to enable just-

in-time (JIT) manufacturing. In fact,

that is one of the goals of Talent

Interlock: a JIT approach to talent

management, where a streamlined

learning supply chain delivers support,

when and where it is needed, to sup-

port real-time performance needs of a

company’s most critical workforces.


6

Thus far we have talked about (1) how

to get the right people through the

human capital “supply chain” more

rapidly to increase the supply of

employees optimally equipped to serve

the needs of the business; and (2)

providing people with the skills and

knowledge needed to perform optimal-

ly at all times. Performance manage-

ment addresses the issue of keeping

those people aligned with the needs

of the business, and keeping them

engaged and interested in their work

so the investment in them pays off for

the entire organization.

Effective performance management

begins with understanding that perfor-

mance has two dimensions: behaviors

and results (see chart). Too often,

companies take a view that what really

matters is just results—the productivi-

ty of a worker. In fact, that approach

can blind executive decision-makers

to the specific behaviors that drive

those results.

Low High

Low

Hig

h

Beh

avi

ors

Results

Consider the four options implied in

the accompanying figure, a matrix

plotting results vs. behaviors. Workers

who fall within the “high behaviors/

high results” quadrant obviously

challenge a company principally from

the perspective of retention: these are

staff that retailers want to retain for

as long as possible. In a different way,

“low behaviors/low results” are also

fairly straightforward: these people

should be offered remediation but, if

performance does not improve, should

be moved out of their jobs and/or the

company.

Performance Management:

Alignment with Strategy


It is those two other quadrants that

pose the challenges. One group appears

to be doing all the right things but is

not being productive. The other group

is delivering results month after

month, but only through behaviors

that one might not want replicated

throughout the company. For example,

consider the president of one major

company who kept hitting his perfor-

mance targets time after time. Only

after close scrutiny did the executive

team find that the consistency of this

executive was being achieved only

at great cost to the rest of the organi-

zation: morale was nonexistent and

retention was extremely low.

By giving attention to which specific

(acceptable) behaviors lead to the best

results, companies can design roles,

find the right individuals to fill those

roles, train them to successfully per-

form in them and manage individual

performance against the desired

behaviors. If companies do not have

the measures in place to assess

progress toward the desired behaviors,

people probably will not produce those

behaviors consistently.

Think this is obvious? Not in practice.

Companies can often send mixed mes-

sages about results vs. behaviors. For

example, they tell sales staff to take

the time to understand what the cus-

tomer really needs. But, for the most

part, the single-most critical measure

of performance for these employees

will still be total sales.

The solution here is for retailers to be

clearer—to themselves and to their

employees—about roles and metrics.

Set clear performance goals and mea-

sure toward them. Do not be afraid to

set “stretch” goals. Retailers that really

optimize the performance of individu-

als have a systematic way of setting

expectations that create a challenge.

Much of the time these are goals that

the individuals themselves do not real-

ize they can meet. Average to low-

average workers tend to set goals that

are either too easy or too

hard, and in either case are misaligned

with the goals of the organization. In

light of this, they require a different

level of management. Given the right

set of supportive environments and

appropriate mentoring, many of these

workers can achieve goals and perfor-

mance beyond their own expectations.

High-performance retailers also know

how to handle turnover properly; they

know how to address that portion of

workers who most often fall into the

“low behaviors/low results” quadrant.

Employee turnover can be a good

thing, if it is properly planned and

managed. Organizations that have

consistently high business or financial

performance also have some sort of

planned or managed turnover program.

They have taken conscious steps to

routinely upgrade their workforces.

There are two parts to this upgrade.

One is using turnover as a reason to

shuffle people and roles, often to

match underperforming employees

with roles that might be more appro-

priate to them. Many managers have

had the experience of watching people

blossom from average to superior

workers simply because they were

finally matched to the right jobs or

roles. How many times do companies

let go of someone with potential, not

because of the individual’s short-

comings, but from the organization’s

or leadership’s lack of insight about

what that person is really good at?

The other part of turnover manage-

ment, though, is systematically plan-

ning to move out of the organization

the bottom 10 percent or so of its

workforce, based on well-defined

performance criteria documented in

performance reviews. This is not a

heartless program. If reasonable efforts

have been made to find the right role

for a person in the organization, and if

performance is still not strong, it is

likely that the fit just is not right.

Every employee termination comes

with emotional pain, but this short-

term pain can be understood as having

long-term benefits for all.

Performance management

and employee engagement

Effective performance management is

a huge contributing factor to increasing

the engagement of employees in their

work and, therefore, improving reten-

tion—especially of “high behaviors/

high results” employees. Solving the

employee engagement puzzle is partly

a matter of putting people into roles

for which they are not only competent

(or potentially so), but for which they

feel some passion. It is possible to

overstate the “passion” point, but more

often than not, the problem is ignoring

it. An executive at one company said it

well: If, in the course of fulfilling an

individual’s passion, they also fulfill the

organization’s passion, superior perfor-

mance overall will result.

From one perspective, the employee

engagement problem is reaching crisis

levels. Another survey by Gallup of

more than three million employees

found that 71 percent describe them-

selves as disengaged or actively

disengaged from their work—the

fourth straight year that workforce

engagement has declined. For the retail

industry, where customer loyalty and

retention is so dependent on effective

interaction with competent workers,

this is a big danger sign. On the upside,

however, a fully engaged workforce

can pay big dividends. In fact, research

has shown that the more engaged

the workforce, the more innovative,

productive and profitable the company.

7


8

Sourcing

Screening & Selecting

Hiring

Onboarding

Scheduling &

Deployment

Contractor & Contingency

Management

Recruitment Services

Talent Interlock

Knowledge Management

Content Delivery

Content Development

Learning Administration

Content Sourcing

Integration & Orientation

Learning Services

Performance Management

Career Development

Succession Planning


Services

Competency Modeling

Job Design

Workforce Analytics

Certification/Accreditation

Learning & Career Needs

Assessment

Resource Demand

Management

Program Management Infrastructure Platform Management Service Center

Support Services

The Accenture Integrated Approach to Managing

the Retail Workforce for High Performance

An integrated, technology-enabled solution can deliver

breakthrough increases in workforce performance. The

Accenture approach wraps recruitment, learning and

knowledge management, performance management and

support services around a core workforce dynamic called

“Talent Interlock” to achieve high performance.

Recruitment Services

Technology-enhanced services

to enable more efficient

sourcing, screening, selection

and onboarding of retail staff.

Talent Interlock

Implementation of tools and

processes to support and

integrate recruitment, learn-

ing and performance support

services.


Services

Technology-enabled

performance management

capabilities that include

measurement of individual

performance and implemen-

tation of the performance

management cycle.

Support Services

Process and technology

infrastructure.

Learning Services

Transformed delivery of

learning to new and experi-

enced staff through imple-

mentation of a learning

technology platform,

eLearning migration, instruc-

tor-led training content

enhancement and co-sourced

delivery.

8


Building the High-Performance

Retail Workforce

Building the High-Performance

Retail Workforce

9

Fundamental forces are driving the

restructuring of retailing to a greater

or lesser extent in virtually every major

market. The dominance of discounting,

the rise of online shopping, as well as

the demographic trends discussed at

the beginning of this paper, guarantee

that retailing in the 21st century will

scarcely resemble the industry pio-

neered in the 20th.

Amidst all these changes, one thing

will inevitably remain constant: the

power of a positive interaction

between your customer and the person

behind the counter. Retailing in the

future will be a game of survival of the

smartest. The retail enterprises that

figure out how to collect the organiza-

tion’s accumulated wisdom on what

sells and how to sell, and then transfer

that wisdom quickly and efficiently to

new generations of workers, are the

organizations that will thrive. In the

increasingly demanding retail environ-

ment of the future, many may survive,

but it is virtually certain that only

high-performance companies will suc-

ceed. Accenture’s concept of Talent

Interlock is a proven process for identi-

fying, training and managing critical

retail workforces so that retailers can

consistently deliver on a differentiated

value proposition, aggressively expand

market footprint into favorable seg-

ments, drive organic growth from their

existing networks, increase average

product sales per person per day and

minimize customer churn.

Accenture’s High-Performance Business

initiative has shown that high per-

formers are more effective than their

competitors at exploiting the collective

intelligence and motivation of their

workforces. There is a strong correla-

tion between financial performance

and the priority organizations place on

human capital development. Leading

companies are far more likely than

others to regularly measure the link

between investments in people and

business results. Moreover, their CEOs

take a much more visible and direct

role in the initiatives to develop their

people. In this way, high performers

create a “talent multiplier”—better

results per dollar of investment in their

workforces. This multiplier serves as a

real and hard-to-imitate competitive

advantage.

If retailers are to meet their most

important competitive challenges

today—fight off competition coming

from few players and successfully exe-

cute a growth strategy—they must

increase the energy and focus with

which they address the workforce

capabilities necessary to succeed.

Retailing success today requires a

highly engaged, skilled and productive

workforce: the right people, with the

right skills, doing the right things to

contribute to the long-term success of

the business.


Copyright © 2006 Accenture

All rights reserved.

Accenture, its logo, and

High Performance Delivered

are trademarks of Accenture.

About Accenture

Accenture is a global management

consulting, technology services and

outsourcing company. Committed

to delivering innovation, Accenture

collaborates with its clients to help

them become high-performance busi-

nesses and governments. With deep

industry and business process exper-

tise, broad global resources and a

proven track record, Accenture can

mobilize the right people, skills and

technologies to help clients improve

their performance. With approximately

140,000 people in 48 countries, the

company generated net revenues of

US$16.65 billion for the fiscal year

ended August 31, 2006. Its home page

is www.accenture.com.

For additional information, please

contact:

Teri Babcock

[email protected]

David L. Reed

[email protected]


Transforming Retail Workforce

Business

Transcript of Transforming Retail Workforce