By 2002, the attrition rate among front-line employees, or customer care associates (CCAs) as Shoppers' prefers to call them, had touched 70 per cent.
This was an alarming statistic because front-line employees account for close to 90 per cent of the chain's 1,800 employees. And if the trend continued, there would be a completely new set of employees talking to the customer after every 1.5 years.
It also meant that the chain would incur additional costs on training new recruits and grooming them until they become as good as the old guard (Shoppers' claims to invest up to 52 hours in training every associate each year).
In 2002, Shoppers' Stop extended its customer satisfaction survey (conducted by research agency IMRB since 2000) to measure employee satisfaction. Over a period of six months, research demonstrated why Shoppers' had to be dead serious about plugging the exit route for employees.
"There was strong evidence that customer commitment and loyalty was directly linked to employee loyalty," explains Sridevi Rao, research director, CSMM (customer satisfaction management and measurement) division, IMRB.
For example, in the five Shoppers' stores with a higher-than-average employee loyalty, customers with loyalty cards spent 28 per cent more. These outlets also had more customer footfalls.
The fact to worry about was that only five out of Shoppers' 14 stores had an above-average employee satisfaction index (ESI). And the killer: 15 per cent of the customer base contributed to 50 per cent of the turnover.
To staunch the flow, first the retail chain had to understand why its CCAs were deserting. Consultants say that Shoppers' selection procedures were wrong: they focused on people who were ready to work on a low salary. The moment these employees got the required experience coupled with the recognition of having worked with a large retailer like Shoppers', they opted for a better job.
Since Shoppers' is among the first organised retailers in the country, front-line staff tend to be heavily poached. The problem was compounded because every front-line employee is accessible to anybody who visits the store. And the visitor could well be a competitor or a headhunter.
For front-line staff the opportunities were tremendous. Retailing in India was heading for boom time. Apart from large format retail chains there was also a rise in other retail ventures like coffee chains and so on.
In some cases, the bottom-of-the-rack CCAs were being offered managerial positions in other retail outlets. Plus, the call centre boom meant that the chain lost employees with good communication skills. Shoppers' could hardly match the salaries offered by the call centres.
Yet in the employee satisfaction survey salary was only the fourth in priority for most employees. "People make the key mistake of thinking that money is the key motivator," says Vijay Kashyap, vice president, human resources, Shoppers' Stop.
He points out that the banking industry has provided the best salary packages in the past 30 years, but has the maximum employee disputes.
For Shoppers' employees, the dominant issues in order of importance were a congenial working climate, growth opportunity, healthy supervisor-CCA relationship and then, salary.
Most employees decide whether they like an organisation or not by using their boss as a benchmark. And for the CCAs their immediate link with the organisation was their floor supervisor. A first cut in the ESI suggested that quality of supervision would affect employee loyalty. So Shoppers' decided to tackle the supervisors.
In 2003, the company held 40 workshops over 52 days to coach its 110 floor supervisors on soft and hard skills. Each supervisor attended 200 hours of advanced courses ranging from management techniques and leadership training to personal counselling skills and detailed product knowledge.
The training made supervisors emerge stronger in areas like giving performance feedback to CCAs, coaching skills and so on. For instance, in the past, performance reviews conducted by the supervisors used to be more of a compromise.
In performance reviews, CCAs rated themselves on the highest score and supervisors did not know how to give them a lower rating. The training sessions helped supervisors evaluate against set criteria and taught them the art of offering negative feedback in a positive manner.
By December 2003, supervisor scores in ESI had climbed up to 64.5 from 56 in August 2002 (when the first employee satisfaction survey was conducted).
All in the family
For its new employees Shoppers' has a 21-day induction training session that includes seven days in the classroom, followed by a buddy training system for 14 days. In this fortnight the new recruit works with CCAs who are certified to be buddies. This also helps the new recruit find a friend in the system and establish a sense of bonding with the workplace.
Shoppers' decided to take this system a little further. For instance, the company followed the existing system with an introduction programme for its CCAs. After 60 days of a group of CCAs joining the company they were asked to participate in a talent contest, Parichay. Parents of the performers were invited to be judges at the event.
The company claims that this helps strengthen ties with not just the employee, but even his family. Kashyap says that this could aid employee retention at a subliminal level.
When an employee contemplates quitting Shoppers' his family members would urge him to stay back with the company that respects even the families of its employees. Also, in Re-tale, the in-house newsletter, family members of the employees were invited to write articles on their relationship with the store.
Apart from quality leadership, the ESI indicated that it was recognition that would foster loyalty among the CCAs. So the in-house newsletter recognised CCAs who were praised by customers for going beyond the call of duty.
These CCAs were also given prizes like gift vouchers and so on. Apart from this the company also instituted a group reward programme. Called Jo jita wohi sikander (winners are champions), CCAs in each store are rated based on product knowledge, operational skills and customer feedback.
Individual CCAs and supervisors who score highly on these parameters are designated as champions. The leading store receives a cash reward that is divided among the team. Apart from this the company also gave employees an open forum to interact with the management through the newsletter.
Growing, growing, gone
Recognition was not enough. It had to be followed with growth. So Shoppers' decided to build a favourable employment climate that would have room for its employees' ambitions.
Says Kashyap, "Their aspirations are unrealistic. Everybody wants to be a manager. We decided to create a great environment taking into account the employees need to grow and be recognised."
First, the chain introduced several non-monetary rewards. For instance, any employee willing to do a professional course could get his entire tuition fee reimbursed by the company.
Then, employees could participate in a certification programme of the UK-based retail institute City & Guilds where high performers are awarded certificates. Last year, 13 Shoppers' CCAs were awarded certificates.
Also, the chain claims that 65 per cent of the vacancies are filled through internal promotions. This is because the chain puts a premium on existing employees when a vacancy crops up.
For instance, one advantage to existing employees is that a job that requires an outsider to be an MBA might well be filled by a competent non-MBA who is an employee. This has, however, has been in practice for the past three years.
Last year for a national selection of supervisors for the chain, Shoppers' demonstrated that even its CCAs could be on the fast track to growth.
For instance, of the 400 CCAs who applied for the supervisory post, 30 were shortlisted for six months of training on development inputs and assessment. Finally 13 of them became supervisors.
From a peak of 70 per cent in 2002, the chain says the rate of attrition is down to 36 per cent at present.
Sure, Shoppers' might have got results in keeping its flock together. But if your employees remain with you for a longer period, overheads like salaries increase significantly.
In 2002-03, the company decided to tank the normal practice of giving a 5 per cent fixed annual increment to CCAs across the board. Instead, it introduced a profit-linked rewards scheme (PLRS).
Through the PLRS, incentives are given in slabs of 5 per cent, 7 per cent, 12 per cent and 25 per cent based on the sales that each CCA managed to get.
"This aligned the sales force to a common objective," says Kashyap. Importantly, these incentives were given on a monthly basis.
Kashyap claims that in the first year of variable pay, 58 per cent of the employees got incentives through the PLRS. And they took home an average increase of 9 per cent.
"In any competitive field you have to run harder to stay where you are," comments Kashyap. And adds, "The Shoppers' Stop experience makes a business case for investing in employees."