Gone are the days when Human Resource department was considered just as a non-profitable department of an organization. With changing times, additional responsibilities and innovative practices, HR departments have now become an integral profit making part of any organization. I was being asked during an interview as to “What is more important – “Strategy or Execution”” And the answer is very obvious. A well designed strategy will go waste if not executed properly and on the other side, if a strategy is not right, it is not going to work however well it is executed. Thus strategizing and Execution goes hand in hand especially when the market is open with a tremendous potential. Lets rewind our memories just a few Years back and think about the words like, Employee retention, Talent matrix, Succession planning, manpower budgeting, Resource optimization, etc. from a retail organizations point of view. And many would agree that these were good to hear in the Annual meetings or during HR planning meetings in many organizations. But now the time has changed. Retail industry itself has changed so drastically within these few years that managing it requires a lot of attention from every department.
Within a very short span of time, India has emerged as a favorable destination for international retailers, outpacing UAE, Russia, Indonesia and Saudi Arabia. The sector employs 7% of the total workforce; this is the second largest employer after agriculture and continues to increasingly provide employment opportunities within the country. The retail formats in India have evolved without any past blueprint or precedent to refer back to. Therefore, the retail industry in India has been defined by experimentation, risk-taking and trial and error methods. Its manpower intensive nature and unique requirements have resulted in human resource considerations taking on paramount importance for the sustainable growth of the sector.
Over these years the prime focus of every retailer was on sales and brand building along with expansion strategies. But this poses huge challenges with respect to dealing with the short supply of qualified, future-ready talent, sustaining high performance and retaining key talent. Therefore, the key question for the retail industry in India is how organizations can sustain high performance whilst battling both economic challenges as well as talent shortages. To face the challenge of increasing competition that has resulted from liberalization, Indian organizations have initiated adoption of innovative human resource management practices to foster creativity and innovation among employees. The growing needs of retail industry can only be matched up with the aggressive human resource practices.
Though having the right product at the right time and the right place is what retail calls for, still its highly supported by the right people at various levels. Proper planning, organizing, strategizing along with excellent execution is the key to the success of any retailer. And execution is purely dependent on the teams and their capabilities. The success of any player in this sector depends not only on understanding target market and implementing marketing mix strategies but also on how effectively a retailer develops systems of high performance work practices including comprehensive recruitment and selection procedures, reward policies and performance management systems, and extensive employee involvement and training. Human resources people are the backbone of any company and the success of retail business depends a lot upon the kind of human resource strategies it is following and how people are managed. Because of increasing competition between organized retailers, the retail industry is facing the challenges and hurdles from different areas.
Fast changing retail trends are heavily impacting the HR in retail, which started off as operational function, and is soon expected to become a strategic partner in the business. The changing face of India’s retail has also seen changes in the way HR department functions. Initially HR was seen as a support function and used to majorly concentrate on hiring and managing the exit of an employee. HR’s key performance indicators were based purely on hiring numbers. Now, with the changing business environment and more exposure to HR functions via education the role has emerged to be a Business partner. Now with the opening up of FDI and entry of large retailers, there are lots of tasks in front of the HR teams like retention, innovative hiring, increase productivity and reducing attrition created due to competition. Training at all levels, which was earlier, ignored by many organizations, has also become a very important part of many organizations. Many organizations have their own internal training centers, which can induce best retail practices in all their employees. Few of the most common challenges faced by HR Team along with their contributions would be:
70% staff of any retail organization would consist of frontline sales staff that is either freshers or less experienced. A major challenge is to make them understand that they are not a part of a Mom and Pop store but of a national or international retail brand. The Store manager at store level has the task of motivating employees but he is more focused upon targets. Also these are not highly experienced people with an understanding of various motivational tactics. Thus HR intervention at store levels has changed the way that a retail staff feels about its organization. Also the scarcity of an experienced talent pool in the retail industry in India means that HR needs to focus on building in-house talent capability since there are just a few professional courses for retail in India
Matching individual and organizational expectations
Retail being an unorganized industry experiencing so many changes to progress towards being an organized industry in a large manner, it is very difficult for HR to offer a concrete succession plan to the employees. This often impacts the employer brand equity of retail organizations when they scout for talent. Thus it is again the responsibility of the Human Resource team to match the expectations of retail employees and show them their career succession plan.
Increasing employee productivity
Though employee productivity is not a direct role of HR Department, HR has to focus on building manpower efficiencies and on ways to enhance employee productivity on an ongoing basis.
Retail being a target driven job, there is a high level of Job Insecurity amongst the retail staff, especially at the entry level. HR Department plays a very vital role of a catalyst and as an internal training department by which employees can meet their desired productivity level. Coming up with various Incentive plans, Motivating employees at various levels and building a sense of belongingness in a vital part of the HR agenda.
Managing compensation expectations
The retail industry operates with wafer-thin margins and, therefore, managing compensation expectations in a situation of scarce talent is a key challenge. People at entry level are keen about their pay package than about the organization. They change jobs even for a hike of 500 to 1000 rupees. So building a compensation mix, which is unique and motivating, is a key challenge. Also there are lots of variable components, which are performance based and thus not taken positively by entry-level employees.
Retaining staff in an industry, which calls for long working hours, working on weekends, and without a concrete career path is a big challenge for the Human Resource department of Retail organizations. The retail industry is one of the largest employers of staff in its sales team and the demand continues to increase with the expansion of organized retailing. However, the industry is also coping with high attrition rates and this will continue as more players enter the market and the workforce has a greater choice of employers. The Human Resource departments are going out of the way to adopt new ways of recruiting and retaining the talent including Social media’s like Facebook where fresh talent can easily be attracted. Human Resource Departments across retail organizations are trying to adopt innovative practices to attract and engage employees. Various motivators are being experimented at various levels like celebrations at store levels, incentives, flexible working hours, internal and external trainings, sponsoring further education, discounts, celebrating the retail employee day, etc.
Human Resource department of Retail organization, still need to understand that Retail is not yet considered as an Industry. People still do not consider retail as a professional career option compared to other industries. Getting the best productivity from the least motivated staff is really a big task till the time people feel enthusiasm to start their career as a retailer. The human resource department is not just a department but also an internal business partner, which can learn from the past, see the current trends, and analyze the future trends and requirements to create a future ready team for its organization along with contributing to the industry practices. For HR to integrate with the Business as a strategic function we need to be clear on the Strengths and Opportunities that HR can build upon and simultaneously be aware of Weaknesses and Threats that can pose new challenges to HR in the retail industry.
With the tremendous expansion of the retail market in India and also with the entry of foreign players in the domestic market, there is a surety of talent crunch in the near future. Here to attract right talent, grooming them as per your company demands and then retaining them is the biggest and ongoing task in front of any retail HR today. We have seen a shift in the focus of HR practices from just recruitment to nurturing the talent. Various organizations come up with different policies to motivate their staff. Though money is very important for entry-level staff, there are various factors, which affect the person’s intent to be associated with a particular organization.
The HR department has now started understanding not only the human values but also the business proposition. The planning and strategizing is done keeping in mind the organization's goal as a long term prospective. They need help moving the function toward a clearer set of priorities; making it more insight-driven and more aligned to the enterprise strategy. A well-designed and well-executed functional agenda can make the challenges easier and the rewards greater. It can help the entire HR team become true partners with your colleagues in line management and better contributors to the overall success of the business.
The key task for HR is to help shape a highly skilled, engaged and productive workforce and to discover new sources of attracting talent. Till date, they have been successful in reaching their goals. There cannot exist a no attrition situation especially in larger organizations, but controlling and reducing it is the task in hand. The future of retail is very certain with major retail expansion, shortage of talented staff, and competition between organizations to attract the best of the available talent, creating new talent to meet their demands and retaining them. The role of HR department has changed till date will change times and it will adapt and improvise itself in the coming future as well.
Note: This article, written by Mr. Barkat Charania, CEO-Beyond Talent Management, was published in 'Images Retail' magazine Nov'13 issue.