The Digital Transformation of Retail Workforce | Whitepaper
The digital revolution has shaken and taken down more than one large industry, none more visibly and holistically impacted than retail.
On many levels retail is reflective of the driving forces of the economy at a certain point in time. Industrialization and mass production created better living standards and more affluent tastes with the introduction of the department store. Next, the suburban geography, which did away with high street, necessitated an even more centralized shopping experience—this was when we saw the rise of the shopping mall and then later the big box store which offered everyday consumer products at reduced prices. Possibly the most significant flashpoint was the internet and eCommerce in the late ‘90s which really took hook hold in the 2000s when many retail stores began to fail. The retailers and brands that are surviving, and in some cases seeing strong growth, are ones that have embraced and invested in the opportunities that digital technologies presented to their organizations to improve operations, make smarter data-driven decisions, and create unique multi-channel experiences that enhanced the connection and understanding of their customers.
With more disruptive times ahead, retailers need to stay ahead of the curve and make bold bets to stay competitive and differentiate. For many organizations, the next area of focus is where the consumer intersects with the product and the last mile of the transaction – with in-store managers and associates.
With the most significant digital investments often falling to Sales, Marketing and Customer Experience groups, the Human Capital Management organization is now being asked to elevate and review their strategies to consider more comprehensive approaches to better align corporate outcomes and the brand, to the digital investments that are made in its people.
We’re going to take a look into a handful of digital concepts that in shorter order can realize better employee engagement, more effective use of human capital, and all-in-all create an environment for better decision making.
Organizations in the top quartile of employee experience were 25% more profitable
One of the biggest challenges facing retail organizations is the need to improve the employee experience. It is not a surprise that this is a top priority for many organizations, MIT research identified that organizations in the top quartile of employee experience were more innovative, 25% more profitable, and had higher levels of customer satisfaction2.
The concept of employee experience originated from the more widely discussed concept of Customer Experience. The principles aren’t complicated and are based on simplicity, personalization, and putting the consumer in control—ideas that we are familiar with through our engagement with brands like Apple and Amazon. It is important to note that employee experience doesn’t touch monetary compensation or benefits, rather it engages with the softer elements that impact employee satisfaction and their perception of the employer –corporate culture, sense of purpose, the opportunity for professional growth, team collaboration, and organizational transparency. An interesting fact to consider is that the majority of online reviews and ratings that employees post about their employer are about experience, not compensation. And for the new generation of workers, these sites are where nearly all potential candidates assess the potential relative value and fit of a new employer. The trickle-down effect of employee experience is felt strongly in recruitment and talent management.
An underlying theme of the customer experience is breaking down the pillars of the organization (branding, marketing, sales, service, finance, etc.) to create a customer journey that is seamless and provides a sense of value and appreciation to each individual customer. Taking the same approach to the various workforce touchpoints and mapping those to understand an employee journey is a great starting point.
To successfully deliver a great customer experience there is no doubt that front line store associates are the cornerstone of that. In turn, retail organizations that are committed to enhancing the employee experience, need to consider how to transform that experience to foster a more engaged employee base.
Organizations that ranked in the top 25% for workforce experience, comparatively provided their employees with 66% more digital capacity to engage the organization than those organizations in the bottom 25%.
We must think tactically to find those quick wins. Organizations are looking at enhancing the bonus interaction and the merit review process experiences. The trend towards online total rewards statements is typically an easy business case to make simply through its elimination of paper and the risk of manual processing. The true value of taking these interactions online is the ability to digitally personalize, track, and build out a program of continuous improvement.
For most organizations, digitalizing Total Rewards is an opportunity to introduce or emphasize the more nuanced aspects of the culture. Many use the occasion to recognize an individual’s contributions to the success of the organization, continuing to establish a sense of individual purpose. For instance, some retail clients will highlight a correlation between improvements in customer satisfaction and increased store profitability and will extend gratitude to the associates for their role in achieving that.
Not too surprisingly, many organizations are reluctant to increase wages beyond the industry benchmark as they still see employees through the lens of cost and not as a valued asset. Instead, they would rather provide non-cash perks and benefits that connect with the well-being and culture they would like to promote. These vary from vacation, subsidized cafés, discounted merchandise to educational grants and scholarships, and paid leave for charity work. This trend is only likely to continue with a 7% increase expected in the well-being industry which is already over $45B annually.
Employees Viewing Statements with Mobile Phone
Long-term incentive (LTI) programs continue to grow in popularity as a means of aligning behaviour with corporate objectives. In the past these were typically only for C suite and top tier executives, where LTI programs are now being seen further downstream, in the middle ranks, to further align corporate objectives. Another trend we are seeing in the retail industry is incentives being tied performance. More brands are providing nominal bonuses tied to store P&L performance and to customer satisfaction scoring. This model creates a great opportunity to not only communicate performance at each quarter and year-end, but on a more regular basis with “nudges”, in an effort to influence positive employee behaviour.
With the expansion of non-cash perks and performance-based incentives, there is an inherent challenge of managing the additional complexity. Understanding the challenge of employee comprehension and clearly articulating the value of the complete investment is also key for brands to achieve employee buy-in. Digital technologies are well-positioned to assist in solving both and many other human capital management challenges.
Automation and Analytics
Design consideration is what really differentiates legacy systems from modern digital experience technologies. With an ability to regularly adjust and improve the experience on the fly, digital experience portals are a great way to create a self-serve employee experience. With the user at the centre of your design, an organization can visually articulate, on a personal level, the more complex and less tangible aspects of the total rewards investment and build on the corporate culture and sense of purpose that employees crave.
The additional advantage to digital is the ability to track success through analytics and create programs that are accountable for continuous improvement, which in many cases is an aspect of the innovation culture that many organizations strive towards. Taking advantage of analytics for better decisions isn’t just a clever concept, high performing organizations are 6x more likely to use data and analytics to understand rewards preferences than lower performing-counterparts according to a Berlin study.1
The last tentacle in considering the digital workforce is eliminating costly manual tasks and taking advantage of automation and highly flexible and secure cloud technologies. Manually managing hundreds of spreadsheets isn’t only cumbersome and soul-sucking, but it injects risk into your business through the possibility of lost or inaccurate data and even sensitive information leaving the walls of your organization, and it is also a barrier to progress. When modern platforms are in place and open API systems for better data access are enabled, the opportunity for continuous progress and evolution are boundless.
Don’t Wait Any Longer
The opportunity is available for brands and retailers to take advantage of all aspects of digital to better communicate their investments in front line staff and to engage them on their device of choice. There are tremendous opportunities to reduce time and cost in processing and producing statements. Forward-thinking organizations are establishing total rewards platforms that are designed to learn and evolve over time.
The key to a successful digital total rewards program is simply to start it up. The vision may be grand, highly automated and personalized, but by beginning with a manageable first phase for a single employee group, which is mobile-ready, your team will have the ability to evolve and extend the program based on employee engagement data.
It is human creativity and potential that keeps organizations innovative and moving forward, not the technology. Allow your people to focus on value and take advantage of systems that can administer and process your compensation—this will maximize the contribution of your most valuable asset, your people.
- Leading the social enterprise: Reinvent with a human focus. 2019 Deloitte Global Human Capital Trends
- Building Business Value with Employee Experience. MIT Sloan Center for Information Systems Research (CISR)
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