HR Intel: What Can HR Do About Retail “Shrinkage?”

Modern supermarketYou may have noticed, but brick and mortar retail stores are not doing so hot these days. It’s hard not to notice with the bevy of big box stores closing in neighborhoods everywhere, leaving strip malls with giant, shuttered eyesores and a ton of unused parking spaces littered with rolling tumbleweeds. So with some big companies essentially throwing in the towel on the physical vs. virtual shopping battle, what’s the impact this will have on HR?

After announcing plans to close 40 stores in January, Macy’s just announced it would close another 100 stores nationwide by early 2017. Not to be outdone, Wal-Mart, typically a stalwart when it comes to brick and mortar revenue, is shutting down 269 stores this year and has acquired Jet.com – the RC Cola to Amazon’s Coke – for $3.3 billion. Target (or “Tarjay” depending on your sensibilities) lowered its financial forecast for the year and now expects to miss earnings estimates for the third and fourth quarters, amidst both the back-to-school season and the retail holiday season. I’d go on, but quite honestly, the list of stores with plans to close physical locations is simply too long and too cumbersome to fully reproduce. Trust me, it’s bad and it’s not just retail. Some industry analysts also say that the restaurant industry is on the verge of a recession.

The one shining exception to this downward trend in physical retail is Home Depot, which hit its targets for the second quarter and realized a nice year-over-year gain in both earnings-per-share and total revenue. But that’s really it. Everyone else (besides Amazon, of course) is… shrinking. And while some of the negative impacts of this are obvious – like the 44,000 retail workers that have been laid off this year – others are a bit more insidious. As usual, HR is well-positioned to help, but HR professionals could also find themselves in a bit of a precarious position if the issues arising out of this trend are allowed to fester.

Typically, a shrinking workforce means a few things: more layoffs and administrative effort around processing employees in and out of the business, redefining job descriptions and responsibilities to account for less man/woman power, the need for agile recruiting efforts on a seasonal basis, proper management of a temporary or contingent workforce and of course, compliance challenges. The latter can take the form of notification requirements for mass layoffs, final pay deadlines, COBRA eligibility and a myriad of other issues. Those are just the basics.

But if a shrinking retail sector is the new reality, that means under-staffed, over-worked and low morale is the new baseline. That means performance and revenue expectations have to be adjusted accordingly. It also means employees must be trained to be more versatile in their skills around communication and compliance, but also more capable of dealing with challenges in the workplace like angry customers or colleagues who don’t show up for work.

Recruiting employees who have the skills to actually make shopping in a brick and mortar store a pleasant experience, not one that will cause a shopper to go right back to his or her computer, is critical. And fostering a sense of teamwork and collaboration is more important than ever, because you have to do more with less.

HR is very much on the front lines when it comes to the battle between Amazon and… everybody else. But if you’re in HR in a retail establishment, the goal is not to beat Amazon. It’s to survive.

Merger Fervor

Picking up where we left off with our last edition of HR Intel, the robot revolution is (still) upon us and every day that passes provides another example. Uber just acquired a robotic trucking firm called Otto, but it’s not Otto’s balance sheet that Uber is after, it’s the technology that enables them to operate trucks with robot drivers.

Fancy M&A attorneys would call this a “qualitative” acquisition as opposed to a “quantitative” one because Uber is after intellectual property and technology as opposed to a balance sheet. If you’re a chess player, consider Uber’s move as a precursor to several other moves, the endgame of which is robots driving Uber cars, something I’ve personally been waiting for ever since 1990’s “Total Recall” with Arnold Schwarzenegger.

Some companies aren’t after tech or people when they acquire. They’re after good, old-fashioned balance sheets. French yogurt maker Danone has acquired White Wave Foods for $10.4 billion which seems like a lot for a brand most people wouldn’t recognize. However, White Wave owns Stonyfield Farms, which it acquired back in 2001, as well as the “Silk” brand of non-dairy milk and “Horizon” organic dairy products. This gives Danone a new market position in organic and non-dairy milk products, which is growing by about 10% per year. That likely puts this merger into the “quantitative” box as both Horizon and Silk are lucrative, profitable companies.

Compliance Carousel

The SEC has issued a fine of $265,000 to BlueLinx, a building products company, for using severance agreements that violated the Dodd-Frank Wall Street Reform and Consumer Protection Act. The SEC alleged that BlueLinx attempted to limit an employee’s ability to cash in on a whistleblower award and prohibited the disclosure of confidential information by outgoing employees to authorities or government agencies without BlueLinx’s permission.

The DEA has declined (for the fourth time) to loosen federal restrictions on the use of marijuana. Thus, it remains a Schedule 1 controlled substance, meaning it is considered to have “no currently accepted medical use,” despite the fact that 27 states have legalized marijuana for medicinal purposes. The discrepancy between federal and state law is a problem for numerous reasons including tax deductions for marijuana businesses and the reluctance of banks to extend lines of credit or take their deposits. The DEA is essentially punting this question to the FDA, which has yet to find that marijuana has any acceptable medical uses. Ain’t federalism grand?

If you want a window into modern collegiate “safe spaces,” then look no further than Princeton University, where the HR department is trying to kill the word “man.” Specifically, Princeton HR is attempting to remove the word “man” from the workplace lexicon, meaning terms like “man-hours,” “workman,” “workmanship,” “forefathers,” “policeman,” “fireman” and “salesman” are all verboten. In their place will be gender-neutral terms like “business person,” “ancestors” and “fire fighters,” all of which will be corrected throughout the university’s policies and job descriptions.

HR Potpourri

If you’re facing the conundrum of how to reward your employees, providing them with private stock may have crossed your mind, but consider what your company’s plan will be if employees want to cash in. In Silicon Valley, tech firms are facing increasing pressure to allow employees to sell private stock (read: not traded publicly) because the firms have delayed going public. Given this increased pressure, some tech firms are providing employee stock owners with “controlled opportunities” to sell some of their shares, but in return, the employees must agree to restrictions on the transfer of remaining shares.

McKinsey & Company just released a new study on data analytics and how HR uses data to inform people decisions. There’s a ton of great info in this study, but here are the three main takeaways when it comes to constructing algorithms and using them to inform people analytics.

  • Don’t just skim the surface. It might be intuitive to assume that the best candidates for jobs come from the best schools, but setting your recruiting algorithm to screen out all non-Ivy League applicants might actually do your company a disservice. It might be that the better-performing employees come from a particular set of schools or even a particular certification program. Dig a little deeper around what makes your best employees tick and construct your algorithms accordingly.
  • Don’t assume that human eyes are always better. If you’re trying to tackle diversity, an “inhuman” pair of eyes might be the best solution. Computers don’t have unconscious biases that they have to account for.
  • Don’t just throw money at your problems. If you’re having a morale or retention issue, get to the root of the problem rather than assuming people will be happy if you give them a bonus.

How is this song related to HR?

In the last edition of HR Intel, we asked you how “Subdivisions” by Rush is related to HR. As the title indicates, Subdivisions is very much about cliques, both in the form of a group of people, but also a stubborn philosophy or rigid thought process. I found this song particularly relevant in high school where peer pressure and cliques were front and center, but these are relevant issues for the workplace as well. The song suggests that removing yourself from cliques of people or thought – even if temporarily – is a good way to be free and clear headed when making complicated decisions or navigating office politics, even if it’s only for a fleeting moment.

We leave you with “People Are People” by Depeche Mode.

Tell us how you think this song is related to HR in the comments section below.

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