Some of the UK’s top retailers highlighted the importance of staff recruitment and retention at last week’s BRC conference.
With the economy looking less healthy than it has for some time and retailers battling to gain a slice of dwindling consumer spend, many businesses are taking another look at their brand DNA and what qualities unique to their business are.
Quality, value, pricing and store environment may be the buzz words, but getting these things right relies on a pool of passionate and talented staff.
From shop floor to chief executive status, retailers must have plans to deal with recruitment, incentivising and retaining staff and replacing them when they move on.
These issues may not be top of the agenda at every board meeting, but retailers neglect the issues at their peril.
At The British Retail Consortium’s annual conference in London last week, some of retail’s top experts discussed the issue, including Harrods managing director Michael Ward, Jones Bootmaker chief executive John Watkinson, and Fran Minogue, managing partner at recruitment consultant Heidrick & Struggles.
The retail industry thrives on finding and nurturing talent, but it is competing with an increasing number of career opportunities for young people, from internet and financial industries, which may be perceived as more lucrative or more cutting edge.
But it’s not just staff on the lower rung of the career ladder. Every interview that Marks & Spencer chief executive Sir Stuart Rose has given over the past couple of months has focused on who will take over when he eventually steps down from the business.
Minogue says succession planning is now topical. “Previously, succession planning was seen as worthy but dull. Sir Stuart Rose has made succession planning sexy.
According to Minogue it is getting tougher at the top. The tenure of chief executives is at an all-time low and the “failure” rate is rising, so succession planning is vital.
“Chief executives either don’t take it seriously or engender the process, while HR don’t have the boardroom clout to get it up the agenda,” says Minogue. “It’s as important an issue as appointing a chairman or deciding whether to sell the business.”
Right for the role
But talented and passionate staff need to operate at every level of the business, includ-ing the more customer-facing positions.
For some businesses, finding and keeping the right shop floor staff is more of a focus, especially at the higher-end of the market.
Harrods managing director Michael Ward says: “The customer has a very short attention span these days and the level of customer service determines where they shop. For us, having people who care about the customer and who know the customer is fundamental. Some of our really good sales representatives are friends with customers, they send them gifts on birthdays and they telephone them. It’s a relationship that complements the shopping experience.”
The 86-store Jones Bootmaker chain was set up in 1857 and originally each branch was run by a member of the founding family. Chief executive John Watkinson believes that good recruiting means defining the job role accurately, comparing internal and external candidates, as well as getting off-the-record references and being prepared to “not hire” and start again if applicants are not right.
He says: “The most powerful way of recruiting is word of mouth. We’ve been inundated with applications because we’re opening new shops.”
Keeping staff motivated and retaining them is the next step. Watkinson says: “Incentives run from shop floor staff who get commission on sales to managers who receive a proportion of incremental profit, to group schemes which reward all staff.”
However, many retailers say that money and salary are rarely the main reasons why an employee leaves a company. The corporate culture, a good boss and regular career challenges are more often the deal breakers.
At Harrods, staff “mobility” is a monthly issue in management meetings. “We look at who is capable of stepping up to higher functions because giving constant challenges is fundamental,” says Ward. “Do you have dissatisfied staff? If you do make sure you don’t, then you have protection against people being poached.”
However, finding staff with the right skill levels is a growing problem, and Ward says Harrods has had to improve its induction processes. “A lot of our best sales representatives are aged between 40 and 55,” he says.
Some believe the retail industry could have an image problem, with competition from other sectors for new young talent, especially with emerging industries connected to IT and the internet. Many young people’s awareness of retail jobs does not go much further than what they see on the shop floor on a Saturday afternoon.
Having good role models and a good boss is recognised as one of the key attractions and retaining influences for talent in retail.
So what makes a good leader? “Be yourself, listen, don’t show the pain, admit mistakes, be decisive and explain the reasons,” says Watkinson.
According to Minogue, top retail talent has never been more scarce, with the penetration of private equity attracting talent, and only a handful of bosses running retail businesses in public ownership.
She warns that not enough retailers are taking succession planning seriously enough, and need to prepare potential leaders to make the transition to the top job which may mean taking on a raft of new activities, including presentations to the City, talking to analysts and the media.
She points to New Look as having the right attitude where Carl McPhail, who was promoted to chief executive in April, moved along a clearly defined path from retail operations and then marketing to international roles, before taking the top job.
Minogue adds that Mike Shearwood’s appointment as deputy chief executive at Mosaic Fashions is good preparation for when current chief executive Derek Lovelock steps down or becomes chairman.
Most retail groups will also look outside the company for the next chief executive, and while Marks & Spencer has traditionally been keen to grow its leaders from within the business, there are other possibilities.
“You could blame much of the management from the late 1990s and early 2000s for the downturn in the performance of M&S,” says Minogue. “And much of the recovery has been brought about by a largely external team that’s come in.”
It is vital to understand how the environment of a retail business is changing too, and as Minogue points out, companies cannot just go for someone the same as the existing chief executive, only 10 years younger.
“It’s not just about the high street any more, it’s about the internet and international expansion,” says Minogue. “The business world is changing and marketing is a good place to start looking for a chief executive. There should be someone under every post that a company is nurturing.
“The big chief executives recognise they are the chief talent officers. They realise that if they get the right talent in the business, that is a lot of their job done.”
Retail job figures
1 in 9: Jobs in the UK are in the retail sector
27%: The proportion of head office staff at Jones Bootmaker with more than 10 years’ service
75,000: Number of employees Sir Stuart Rose has at Marks & Spencer