Cut back and shore up

Retailers undertaking staffing reductions with dollar savings as the end goal are advised to make sure they cut with an eye trained on the future, too.

“In this environment, companies must move beyond radical cuts to redesign their organizations,” said Craig Rowley, VP and national practice leader for Philadelphia-based human resource consultancy Hay Group. “Instead, you need to surgically ‘prune’ your business so that the remaining structure can be productive and positioned for growth when the winter of our economy is over and spring arrives.”

Rowley offered the following three steps toward positioning a retail chain for the coming of post-recession “spring time”:

Ensure your company has the right-sized organization. Determine if current operations will push the company forward. 

• Redesign or refocus functions that have less importance now — real estate is less of an issue if new stores and remodels are not an objective.
• Redirect activities that are nice to do, but don’t lead to sales, service or profits. “Best-in-class organizations eliminate low value-added work, not jobs,” said Rowley.
• Evaluate staffing levels for officers and middle managers. A company with less management can run with broader spans of control and can provide improved speed to respond to customer changes.

Align your leadership team. The type of leadership that worked in the past may have to change to meet the new business environment. 

• Build an executive team that effectively works together. Each member of the top team has to think like the CEO and have a common vision for the total business. This will require more matrix-like leadership behaviors including influencing versus directive, collaboration versus silo focus, and flexibility versus procedure-driven.
• Align rewards and incentives with the new business model. Organizations have to both understand what business success looks like and how to define the goals to produce good results.

Build the right selling environment. Use sales staff and merchandising strategies more effectively to be more customer–centric. 

• Organize your store and get your SKUs matched with the right price points and margins. Central buyers have to stay close to the store and the sales team; let them be the voice of the customer.
• Motivate sales people to sell. All too often, the sales staff is focused on execution as opposed to serving the customer. Today, everyone has to focus on how best to use those hours in ways that customers value. In addition to “the basics,” companies must encourage the store personnel to know their customers and have the ability to flex store approaches to meet local customer expectations.

“The old ways of managing, leading and selling will not work in this environment,” Rowley said. “Now is the time to get ahead of the curve. The winners will be those retailers who rationalize the size of their business with sales, get leadership right and manage limited hours in the stores in ways that create customer value.”