"Plateau delivers a best-of-breed talent management solution with deep functionality for learning management, performance management, compensation management and career and succession planning. This allows organizations to take a unified approach to develop, manage, reward and optimize their talent. Superior best-in-class talent management solutions can be deployed individually or together, enabling current and prospective customer to future-proof and expand their investments."Source: Plateau Systems
Reducing Turnover and Managing Change: How Retailers Can Benefit from a New Approach to Training and Talent Management
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High turnover, a rapidly changing marketplace and harsh new economic realities are reshaping the retail sector:
- The impact of the retail industry's traditionally high turnover rate is compounded by cuts in headcounts and margins, challenging managers to maintain sales and customer satisfaction.
- Complying with sector-specific laws (such as HACCP) gets ever-more complex while budget cuts make it more difficult for HR to deliver and document mandated training.
- Globalization plus demographic shifts challenge managers to find new ways to manage, motivate and assess a diversified, multi-generational, and widely dispersed retail workforce.
- Widespread operational and strategic alignment demand employees quickly become proficient with new technologies, business processes, products, skills, and behaviors.
- Ongoing evolution of retail makes it a challenge to keep employees' skills and career paths aligned with the business's changing talent needs and strategic goals.
In response, retailers are rethinking virtually every aspect of their operations. One area where this rethinking is paying substantial dividends is in giving training more of a strategic role within the retail organization – and integrating it within a comprehensive talent management program.
A recent Deloitte report affirms the value of investing in strategic talent management, stating that the new retail model "requires new skills and capabilities as well as a new approach to talent management... Talent management is fast becoming a primary driver of organizational success."
This paper examines how a talent management system that integrates learning, performance management, compensation, and development and succession planning can make a bottom-line difference in the retailer's ability to reduce turnover, manage change and achieve strategic goals. This paper also examines how instead of purchasing software systems, many retailers are using "software as a service" (SaaS) solutions to create an agile talent management environment that makes optimum use of both budgetary and staff resources.
New Challenges in the Retail Sector
Retailers employ more US workers than any other industry. Like every industry, the retail sector values the role learning plays in orienting new employees, sharpening product knowledge, improving employees' selling and people skills, and complying with government-mandated training such as broad OSHA initiatives as well as sector-specific rules such as Hazard Analysis Critical Control Point (HACCP) requirements that apply to retail food service.
Today, however, learning is just one component of the strategic tools necessary for retailers to emerge successful from profound economic and social challenges.
Factors Reshaping the Retail Industry:
- Economic Factors: One of the biggest challenges for retailers is that consumers are focused on saving, not shopping. This has forced retailers to cut staff dramatically, making it crucial for remaining employees to work harder to maintain policies and performance as well as customer service and satisfaction. Meanwhile, the complexity of regulatory requirements raises the risk of noncompliance at a time when retailers can least afford fines or negative publicity.
- Workforce Diversification: Like all employers, retailers face the fact that many experienced older workers are retiring and leaving the workforce. Of even more immediate concern is the retail industry's high turnover rate, requiring retailers to continuously onboard and educate new employees while managing the different personal priorities, perceptions and communication and learning styles of a workforce that now includes Baby Boomers, Generation X and Generation Y workers. In addition, while increased globalization unlocks profitable new revenue opportunities, it presents retailers with the challenge of managing a diverse, global workforce.
- Operational and Strategic Realignment: Retail is being transformed from a single-store model where the skills of entrepreneurship and personal relationship-building were essential, to a multi-store, multi-channel, multi-national model where marketing and merchandising are used to connect with customers and direct strategic growth.iii As a result, retail technology and retail jobs (both back-end and client-facing) are becoming more complex.
How Technology Drives Talent Management
Retailers recognize that a comprehensive approach to talent management is required to recruit, develop and retain the right employees. In addition, talent management is a powerful tool for managing change and aligning both culture and organizational competencies with strategic business goals.
In order to give retailers the functionality and agility they need to meet today's challenges – and develop the competencies they'll need down the road – a good talent management solution must integrate the right strategy with the right technology.
A technology-based talent management solution offers retailers three key advantages: automation, integration, and reach.
Automation reduces the cost and burden of administering talent management activities, as well as the risk that key activities, employees or data will fall through the cracks. For example, an automated learning system can alert employees to required training, schedule them, deliver the training and then document that employees have completed the training by the deadline.
Integration allows information to flow seamlessly across the entire talent management system rather than getting trapped in stand-alone applications for learning or performance management. This eliminates duplicated costs and efforts, improves reporting and decision-making, and allows the organization to have its strategic objectives drive everything from recruitment to retention efforts. For example, in an integrated system, the actual performance review document can contain links that take the employee directly to learning activities for addressing any specific weaknesses or career objectives established in the appraisal itself. Further, in an integrated system, competencies can be aligned directly with strategic business goals and then used to articulate expectations and measure performance in every aspect of the talent management program.
Reach refers to the vital role technology plays in allowing the retailer to extend one consistent talent management program to employees at all levels, across all channels, and in all locations worldwide. Reach also refers to the technology's flexibility in serving different types of content and making that content efficiently available in today's fast-paced, lean-staffed retail environment where it's often difficult to take employees "off the job" for training, assessments, or career planning. In fact, according to Susan Ayers, an instructional designer who has developed Web-based training for retail clients such as Circuit City, the flexibility and accessibility of the system is crucial in helping retailers "find ways to fit a creative training plan into employees' very busy days."
In addition, to realize the full potential of talent management processes and tools, the technology should be implemented at the enterprise level. This is because in retail organizations, talent management activities are often managed centrally but assigned or conducted locally.
Once you've identified a talent management system that incorporates the right technology to meet your needs, you have a further decision to make:
How do you implement talent management technology?
Until recently, retailers had to choose between creating an expensive, custom talent management system or building their own from bits and pieces of desktop applications or stand-alone applications for learning, performance, compensation, and other functions. Now, function-specific solutions like those available from Plateau can be purchased individually, but also immediately integrated with each other. This means retailers can buy their talent management system piece by piece, but have each piece integrated as it is added.
A newer option is to trade infrastructure and licensed software for a SaaS model.
Instead of purchasing systems and licensing software, many retailers are opting for the "Software as a Service" (SaaS) model whereby they pay monthly or annual fees to access talent management functionality.
Retailers must look for a vendor who, according to a 2009 Bersin & Associates study, has done more than create a hosted infrastructure. That infrastructure must also scale, "allowing for the same robust security, domain management, language support and configuration found in licensed software." In addition, the software must be configured to run many of the customer's business applications within a single software environment, to turn features "on and off" for various customers and "allow non-technical users to set up, configure, administer, monitor and develop reports on their applications."
Many organizations have already adopted the SaaS model for learning and talent management, including Luxottica Retail, a business unit of the Italian eyewear giant, Luxottica Group: Using Plateau's SaaS LMS and Content, Luxottica Retail delivers targeted training to 38,000 employees in more than 6,200 locations worldwide – with just two staff members.
The switch to SaaS was driven by cost-savings and the desire to use talent management to support organizational change.
What Retailers Need in a Talent Management System
The goal of talent management is to attract and retain engaged employees, integrate new employees into the workforce, and align performance, learning, development and compensation with strategic retail objectives. A total talent management solution, therefore, not only provides the functionality for each of these processes, but provides an integrated and continuous cycle through them.
- Competency-based. Competencies define what skills, knowledge and behaviors are needed to succeed in certain positions. By integrating competencies consistently across the entire system, the talent management team can find the best candidates for open positions, identify overall deficiencies in staff capabilities and help individuals and groups align their development the retailer's specific business objectives.
- Responsive Reporting Capabilities. The training team should be able to manage, measure and report on individuals, groups or the entire enterprise. Capabilities should include trend analysis, gap analysis, facility and cost management reporting, training and performance history, and documentation of training, certification and other activities.
- Single Point of Access and Management. The system should integrate learning, performance, compensation and development. Thus, the retailer should be able to deliver and manage all types of talent management activities for all levels of employees across all channels. The system should have the air-tight security and authorization features to allow employees, supervisors, HR, and the leadership team to access the information they need. The system should make it easy for the talent management team to keep content up-to-date and to make any "course corrections" needed to align competencies, job profiles, compensation, or other processes with today's rapidly changing business needs.
In addition to general requirements, let's now look at each of the four system components. The following does not cover detailed functionality. Instead, the focus is on identifying the key "success driver(s)" in each area – the unique capability that will give the retailer true power to translate talent management into bottom line business improvement.
- Access to a Wide Variety of Content, Formats, Delivery Options. Instructor-led classes, online courseware, videotapes, document review, and institution-specific content – all with an easy system for managing updates, versions, and new additions. The system should also manage non-course activities (lectures, seminars, on-the-job training, etc.). In addition, the system should support e-learning and augment e-learning by integrating Web-based content with dynamically generated online tests, a critical advantage in delivering federally mandated training in areas such as diversity, OSHA, and sexual harassment prevention.
- Automated Updates, Scheduling, and Enrollment. The system should handle online enrollment and scheduling. It should manage contact hours and document credits for certification or CEU requirements. It should proactively notify retail employees of when and what safety or other mandated training is due. Changes that are made to competencies should automatically be applied throughout the system so employees can continue to link directly to the most relevant training for improving skills or advancing their careers. Additional functionality should include common training calendars and a central point for checking individual enrollment status.
- A Direct Link from Performance Appraisals to Learning to help employees move quickly to address competency gaps or goals set out in appraisals. Performance reviews become more dynamic and less subjective. Competencies can also be used to develop individual learning plans targeted at retailer's specific business goals.
EXAMPLE: Luxottica Retail uses its Plateau system to deliver courses on company policies (store operations to loss prevention), product knowledge, leadership and basic optics training, plus function-specific training. As part of the appraisal process, supervisors can require employees to complete competency-based training. The impact on both performance and profitability can be dramatic: the 85 people designated to take Luxottica's new retail training program make million-dollar purchasing decisions. If the training empowers employees to improve their performance or apply new tactics in even one decision, it could save the company millions of dollars.
- Metrics and Objectivity. The use of competencies helps win greater employee buy-in for compensation policies such as pay-for-performance. From their appraisal, employees know exactly what is required to succeed, so they have greater control over their performance and thus their compensation. Compensation planning is easier, too, since management can see at a glance how employees rank on job competencies and how they rank compared to other employees in the same job or in the same unit. In addition, It also enables the talent management team to use compensation to motivate specific actions and behaviors that are of the greatest strategic value to the business. Thus, compensation can target not just the end results of performance, but the competencies that enabled that performance.
Career and Succession Planning
- Individualized Development Plans. Not only are retail jobs getting more complex, retailers themselves are operating across multiple channels. This means that the same job can require different competencies depending on whether it is performed online, on the phone or on the selling floor. For example: A phone customer rep needs good phone manners and the ability to input orders, vs. in-store clerks who need to be able to deal face-to-face and manage the cash wrap. In addition, not all great sales people make great managers. So, in terms of both career planning and succession planning, it's critical for the talent management system to support individualized plans rather than applying cookie-cutter development paths.
- Dynamic Progress Tracking. Employees should be able to track their progress. So should their managers, so that progress can be supported, feedback can be given and any "course corrections" can be made well in advance of the next round of appraisals.
- Gap Analysis. The talent management team should have the ability to inventory the current talent pool to identify high-potential candidates and to define specific recruitment needs. The integration of competencies means that where gaps do exist, specific skills, certification, and other attributes can be identified for each job title and then mapped to specific learning activities or hiring initiatives. In this way, the retailer maintains a pipeline of talent that is perfectly aligned with the strategic business objectives of the organization.
Putting Talent Management into Action
A good talent management strategy addresses immediate needs such as recruiting the right employees, conducting performance reviews, reducing turnover and complying with training requirements.
It also manages change and motivates desired behaviors (e.g., tying compensation to proficiencies and performance) and ensures that the retailer's talent pipeline is filled with employees who are developing the competencies necessary to take on new challenges and lead the company forward.
Through a competency-based approach, the retailer can use the talent management program to help all employees develop the skills, knowledge and behaviors of top performers. This also gives both employees and management a common language – and objective metrics – to use in keeping recruitment and selection, assessments, learning, career and succession planning, and employee development all aligned with both immediate and long-term retail business goals.
Implementing a strong talent management system obviously takes a serious investment of time and resources. For retailers, the return on investment, however, can be significant.
According to research reported by HR Magazine:
Retailers that spend 3.5% to 4% of their operating budget on workforce development also rank in the top 5% to 10% of the best-performing companies within the retail sector.
A study published in the Journal of Applied Psychology looked at 681 fast food franchises within the same parent system that sold the same products.
The quality of employee training was the only difference, and stores that built quality programs saw an 8% improvement in customer service performance and an 11% improvement in profits compared to the other stores.
Clearly, investing in talent management has a bottom-line impact on revenue growth, earnings performance, and customer service. Specifically, here are the benefits that can be derived from putting a strong talent management solution into action:
- Save money, reduce time away from the job, and tailor development to business goals. The talent management system centralizes activities, content, reporting and documentation across locations. From interviews and learning, to annual appraisals and individual development plans, all employees are treated equally, no employees are overlooked, all deadlines are met while making sure that talent management activities are accomplished with the most efficient use of budget and staff time.
- Develop and recruit the right people with the right skills. By seamlessly integrating competencies into every step of the talent management cycle, retailers can be sure that recruitment and performance appraisals target skills, knowledge, and behaviors aligned with corporate needs. For example, in hiring new sales staff, the process might include testing to determine competencies such as problem-solving and critical thinking. An annual review of a store manager might include the goal of attaining greater proficiency with Sanitation Standard Operating Procedures or the retailer's specific policies on how to handle employee theft or shoplifting, and providing an individual learning plan to achieve these objectives.
- Reduce organizational risk by identifying successors for critical positions and proactively developing the skill sets and competencies needed for employees to succeed in those positions. An integrated, competency-based talent management system enables retailers to analyze and compare the company's talent pool against what will be needed as the industry continues to evolve. The system not only provides the analytics and reporting to conduct the gap analysis, its learning and succession planning/development components become tools for bridging the gap.
- Retain talented staff by giving employees greater control over careers and compensation. Pairing individualized development goals and plans with efficient access to training and certification improves employee satisfaction. Having a clear path to advancement and rewards based on metrics rather than on subjective evaluations is a factor in both retention and recruitment as well. Recent Salary.com research shows that giving employees more control over their upward path plays a critical role in retention: employees "are less likely to seek job opportunities outside the organization if there is a career path in place that is suited to their competencies." By guiding employees into "right-fit" jobs, a competency-based talent management system also make it easier for employees to perform well and thus enjoy rewards.
- Support change management and competitive goals. The talent management system can become an important internal communication tool, providing the education to secure buy-in and support the success of new policies, procedures or cultural change. Talent management initiatives can also help retailers continually align development and compensation to recruit and motivate talented employees. In addition, a system with fully integrated functionality and reporting provides management with the insights to stay proactive in responding to changes in everything from retail technology and marketing, to new regulatory requirements or competitive moves.
As product and price become less important differentiators, retailers search for new ways to differentiate themselves and compete. In this new era, talent management plays a more important role than ever.
Retailers stand to gain significant strategic and operational advantages from implementing an enterprise-level Talent Management System. The cost savings and administrative streamlining are especially dramatic when implementing a software-as-a-service (SaaS) model. In addition to cost savings, the retailer stands to gain competitive and strategic advantages, such as reducing staff turnover and organizational risk while giving managers new tools for motivating performance and managing change.
Not just any talent management system, however, has the functionality to support retailers in their increasingly challenging multi-store, multi-channel, and multi-national industry. It is critical to choose applications that are already proven to work in the rigorous retail environment. Further, it is crucial to choose a system that integrates learning, performance, compensation, and development and applies a consistent, competency-driven approach across all activities.
With such a system, retailers can focus talent management resources where they will have the greatest impact on everything from turnover, to competitive positioning, compliance, customer service, lower operating costs and bottom-line profitability.
Plateau Systems is the industry's premier provider of enterprise-class SaaS talent management suites. Major global corporations and government agencies, including General Electric, the U.S. Air Force and Capital One Services are using Plateau's integrated talent management solutions to improve productivity and facilitate strategic workforce initiatives around learning, performance, compensation and career and succession management. Plateau is widely recognized throughout the industry for its commitment to customer satisfaction, forward-thinking vision and for consistently delivering best-in-class functionality. Founded in 1996, Plateau is headquartered in Arlington, Va. and has offices across the United States, Europe and Asia Pacific. For more information about Plateau, visit http://www.plateau.com/.