Human Resource Knowledge

Innovation in HR at a leading supermarket

SRS Super Market is one of the leading super markets of an advanced country. It was one of the first companies to actually quantify the hypotheses in a HR strategy map. It has further refined its firm wide work-shop-invest model to include a focus on specific relationships within stores. SRS the Brand Central department specializes in consumer durables (TVs, refrigerators etc). These items tend to be expensive and complex which are purchased infrequently and required high levels of pre purchase advice from sales people. Sales people are paid on commission. In contrast, in the Women’s Ready to Wear (RTW) Intimate Apparel department, products tend to be inexpensive and customers generally make their own selections with limited input from salespeople. Customers tend to purchase items more frequently. Here the sales associates are paid on an hourly basis.

The VP for innovation and organizational development and his staff wanted to know whether the relationship differ among the Work Shop and Invest categories departments. Because SRS collects data on each of these elements by department, they were able to generate some surprising answers. The willingness of customers to recommend SRS as a place to shop to others which is called as customer advocacy is a key driver of profitability. For example, in Women’s RTW/ Intimate Apparel, a 1% increase in customer advocacy was linked to a 7.4 % increase in revenue, and in Brand Central to a 4% increase. However, the drivers of customer advocacy differed across departments. In the RTW/ Intimate category, working conditions and a belief that the company’s pricing is a competitive strength significantly affected overall attitude toward SRS and had a favorable impact on customer advocacy. In Brand Central (a commission based category), pay and a willingness to recommend Brand Central emerged as a significant driver.

The presence of attentive and responsive managers was a core driver of sales associate attitudes and ultimately, economic value across all of the departments studied. Such analyses are critical for helping SRS to gain an increasingly sophisticated understanding of its strategy map and to help implement that strategy faster.

Drilling Deeper at SRS

A fuller understanding of the relationships between people, strategy, and performance may also require some innovation thinking in the analysis of data. At SRS, customer satisfaction is a key driver of store performance, not only because satisfied customers are more likely to become repeat customers, but also because they are more likely to recommend SRS to others as a good place to shop.

Customer advocacy is a key driver of profitability at SRS. SRS also found the relationship between customer satisfaction and advocacy is nonlinear. When customers rated their overall satisfaction with the shopping experience as a “10"? on a scale of 1 to 10, 82% of them were likely to recommend SRS to friends or family—a key driver of business success in retailing. However, when customers rated SRS a “9"? only 33% were likely to recommend SRS as a place to shop. While SRS managers initially believed that a “9"? on a 10-point scale was a high rating on customer satisfaction. Analysis showed satisfied customers were not enough and what they needed were enthusiastic customers to drive referrals. Understanding these relationships helped SRS managers to understand how much customer satisfaction was “enough"?

Labels: HRM

posted by Paresh @ 10:12 AM