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Role, Scope, and Challenges of HR in Retail

0 comments Share on twitterShare on facebookShare on linkedinShare on email By Niranjana Harikumar on Dec 28, 2012 The evolution of the retail industry in India over the past few years has been propelled by rising consumerism, demographic dividend, increasing disposable incomes and the large middle class population. The retail formats in India have evolved vastly over a relatively short period of six to seven years, 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. In the recent past, the advent of the worldwide recession has brought in a new set of challenges associated with a decline in consumer spending as compared to the overtly optimistic projections from a few years ago. Retailers today are focused on drawing customers into the stores to drive sales while at the same time reducing cost overheads. On the other hand, 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. In this context, the SHRM Forum meet at Kolkata on 13th Feb 2012 explored the myriad challenges of HR in the retail sector in India, along with its role and scope. The session was led by Nihar Ranjan Ghosh, Executive Director HR, Retail Sector at the RP-Sanjiv Goenka Group encompassing retail companies such as Spencers Retail Ltd, Music World Retail Ltd, Au Bon Pain Cafe India Ltd. and Beverly Hills Polo Club Retail Pvt. Ltd. The Retail Sector in India Key Challenges Nihar started off by giving a context of the landscape of the Indian retail sector and dwelling on its key features. Some of the features of the retail industry in India include the following:

Impending entry of many global players, basis the Governments FDI policy changes, leading to ambiguity in the sector Growing acceptance of modern retail formats Markets expanding beyond metros and Tier 1 cities Strong emphasis on profitable growth Toughening of internal efficiencies and cost or manpower optimization Optimization of technology usage Developing supply chain efficiencies Focus on effective store management and enhancing availability Handling very high attrition rates and low employee engagement levels

Given these features and the unique characteristics of the Indian retail landscape, Nihar spoke of the key challenges for HR in this sector.

Cultural alignment with organizational values and vision In an industry that is fast-growing, the organization is constantly onboarding employees from diverse backgrounds and with a wide range of experience. In this context, the challenge for the organization lies in galvanising these diverse backgrounds to create a unified culture that is its own. Managing ethical dilemmas With a very young and heavily decentralized working population as well as store supervisors in age groups often ranging from 21 26, the organization often has no visibility on the interactions that happen between the store and the suppliers across India. There is a need for HR to ensure that no ethical breaches exist in these interactions between store level employees and suppliers. Building Capability Given the vast number of relatively inexperienced employees at the store level who are the face of the organization for the customer, Nihar pointed out that a key challenge is to make them understand that they are not a part of a kirana store but instead, a national retail brand. The store supervisor or manager is often young and inexperienced and has several young store executives reporting into him. HR holds the responsibility for building the capability of these young supervisors to lead and motivate their teams. Also, there are very few retail professional courses in India, therefore, a retail organization often has to make substantial investments in grooming and building capability of its employee base. The diverse geographic spread of these employees makes this even more challenging. Also, very often, young managers are sent on stretch assignments where they have to create a market in a new territory from scratch and set up operations. In this scenario, HR holds the onus of creating a readily deployable talent pool. The scarcity of an experienced talent pool in the retail industry in India means that HR needs to focus on building inhouse talent capability. Nihar spoke of how many Indian organizations including Spencers Retail have created retail talent academies to build the capability of their inhouse talent. Matching individual and organizational expectations Retail being a nascent industry reporting so much flux, it is next to impossible for HR to offer a concrete career path to the employees. This often impacts the employer brand equity of retail organizations when they scout for talent. Increasing employee productivity In an era of cost-cutting and wafer thin margins, HR has to focus on building manpower efficiencies and on ways to enhance employee productivity on an ongoing basis. Managing empowerment vs. control

Retail organizations are often heavily decentralized and have a distributed structure. Given this structure, a challenge for HR is in balancing empowerment at a store level with the necessary controls. Job insecurity Given the history of lay-offs and manpower rationalization during recent recessionary times, as well as the ongoing flux in the industry, there is a high degree of job insecurity that heavily impacts employee retention. Employee engagement and communication The retail organizational structure brings in unique challenges in terms of keeping employees in distant, diverse locations engaged and excited about organizational goals. Many retail organizations such as Nihars own use different types of leadership connect sessions to increase alignment to organizational goals and values, facilitate open communication and build engagement. He explained how this is done at multiple touchpoints by involving senior management across the organization. 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. The compensation structure in most retail organizations has a substantial variable component that is linked to store performance. This additionally brings in challenges in terms of employee rotation into new roles across the stores. Many store executives come from relatively underprivileged socioeconomic backgrounds and see their job as a source of income rather than as a vocation. Therefore, even small increases in salary offered can often tempt them to take up outside offers. For retail organizations that have invested heavily in training and grooming these employees, this becomes a heavy cost burden. Stressful work culture and unattractive working hours The customer-facing nature of the industry often results in emotional labour related issues of stress and burnout. Young store level employees who often come from underprivileged backgrounds often have to face the ire of affluent customers who may exploit the socioeconomic divide that exists between them. Also, there is a need to work on weekends as well, which further makes the work requirements unattractive to many prospective employees. The Role and Scope of HR Nihar further elaborated on the role of HR in addressing these challenges in the retail sector. He explained how HR needs to pre-empt and plan for the workforce skills that will be required in the future given the changing industry scenario. It also needs to develop the capability of in-house talent while also working with employees to chart out tangible career paths.

A key imperative is also to discover newer, more effective sources of talent and to deploy the available talent more strategically to fit the requirements of the role and the operational demands of the business. Nihar also listed down what he saw as critical success factors for an HR professional in the retail industry. These included the following:

Strong customer service orientation Effective communication skills Fast decision making capabilities Ability to collaborate and operate within a team, interpersonal skills Strong result orientation Meticulous planning Analytical and problem-solving abilities Flexibility and ability to deal with ambiguity Creativity and innovation

As retailers in India weather the economic challenges and prepare for competition from new players, it is evident that sharpening their talent portfolio will be critical to succeed. The key task for HR is to help shape a highly skilled, engaged and productive workforce and to discover newer sources of effective talent. In an industry that is characterized by enormous flux, change seems to be the only constant. HRs challenging role, then, is to pre-empt industry trends, identify future business needs and create a pool of future-ready talent. HRs role in this scenario can be summarized in this anecdote that Nihar quoted while concluding the session: Every morning in Africa, a gazelle wakes up. It knows it must run faster than the fastest lion or it will be killed. Every morning a lion wakes up. It knows it must outrun the slowest gazelle or it will starve to death. It doesn't matter whether you are a lion or a gazelle... when the sun comes up, you'd better be running. Niranjana Harikumar is an organizational development consultant who has worked with various organizations in designing and implementing competency-based assessment and development programs for different employee populations