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HR Planning Challenge Facing Retailers in 2018

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Allan Saffy

Allan Saffy, Decision Inc.

In an article I published recently called “How retail finance teams impact their business by transforming financial planning processes that incorporate meaningful operational levers “, one of the problems I touched on was how difficult it is for retailers to have a realistic view of the impact their HR strategy has on their profitability.

In this article I highlighted how retailers are facing the challenge of increased customer expectations around exceptional service, product quality and availability. With the increase in consumer choice, retailers are faced with coming up with compelling strategies to attract and retain customers. One of the many ways that retailers are planning to combat this is by differentiating themselves from competitors through more effective front line sales staff.

Executives and store managers are not only focusing on their sales numbers but more and more on managing the critical success factors that lead to increased revenue. One of these is their ability to service each customer that walks in the store. Some studies show that by servicing each customer that walks through your doors, can increase store sales by as much as 30%. In order to achieve this would mean that stores need to have enough well  trained  front  line  sales  staff  on  the floor to accommodate customer traffic, something which becomes difficult to manage during peak seasons.

In order to help organisations realise this substantial revenue opportunity, Store Managers, Executives and finance teams are faced with two key components they need to plan for:

  • Anticipating the number of front line sales staff needed for each high traffic period.
  • Ensuring all front line sales staff are knowledgeable and well trained.

Anticipating the correct staff numbers is a difficult task and cannot be derived purely off a growth percentage on last year’s actual or budget. It needs to be more of a target based planning number that is driven off key consumer spending metrics that are predicted by region.

Depending on the organisations HR strategy, this could typically create a need to increase the casual staff numbers to service anticipated customer footprint during peak retail seasons OR what seems to be a trending alternative to increase the balance of permanent employees and reduce the high staff churn (which can be as high as 250% in retail organisations) and by so doing increase the return on the training investment made in the employee.

All too often planning the roll-out of an HR strategy of this nature is disconnected from the financial impact it has and, as multiple iterations of budget cuts are rushed through the organisation, the financial view deviates more and more from the intended HR strategy.

Although this is very common in most organisations, it does not have to be the status quo. There’s no reason why HR adjustments made at the operational level can’t immediately reflect the impact on the intended HR strategy as well as the group P&L for both the short term and long term. With the right planning processes and enabling technology, limitations on business decision making of this nature can easily be eradicated.

One of the ways this can be accomplished is by leveraging the enhancements technology has undergone in the past 5 years. To date technology available for financial planning has broken all the barriers that kept front line operations, HR and finance operating in silos. These teams have the ability to work together in a manner that the impact of a change in one area will immediately become visible to the other areas. The current trend in performance management software empowers business, has less dependence on IT, has lower risk of errors and enriches decision making information in a fraction of the time it took in the past.

The benefits of innovation are not restricted to the products and services organizations have to offer, and in a world where this exact innovation determines longevity, finance teams can play their part  through innovating their processes to provide the business with meaningful decision making information as well as more productive financial processes. All of which can help operations unlock potential strategic initiatives giving them a competitive edge.

Decision Inc. is an information technology and advisory company that works with finance teams to help them transform their financial planning and analytics processes from being time consuming, inaccurate and low value-add processes to meaningful efficient processes that contribute significantly to business success. We have extensive experience in implementing complex planning and consolidation transformation projects helping a number of the largest retailers in South Africa improve the value the finance team offers their line of business operations

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