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Performance Management

Published July 2008

Performance Management: A Retail Perspective

  Lindsay Edmonds Wickman

Glitzy store windows and snappy marketing campaigns make retail jobs seem simple: stock, smile and sell. But beneath the surface there's a web of factors that influence retailing and make accurate employee performance measurement a real challenge.

When there is a downpour, customers stay home. When the economy dips, they hold on tighter to their wallets. And when oil prices rise, they don't travel as far from home. All of these external factors affect the retail industry and make performance management improvements elusive.

However, if organizations understand these factors, they can assess employee performance based on realistic sales targets and the total customer experience. Then talent managers can make whatever behavior suggestions or corrections are necessary for improvement. Retailers who do this will have a competitive edge because employees will feel invested in their work, turnover will decrease and, ultimately, sales will rise.

"The industry has many moving parts," said Becca Goren, global product marketing manager with SAS, an analytical software and service provider. "It's almost like predicting the weather. There are so many parts, having a mechanism to build all of these things into a model and forecast and plan on the basis of [that] is absolutely critical."

The question becomes: In light of moving circumstances, how can retail companies create effective performance management processes?

"A lot of it starts with good data," Goren said. "I don't think there's a retail shop out there that's not looking at economic trends and fashion trends. The question is, What are they doing about it? How are they tracking it? We traditionally find organizations do things in pockets. There is some sales planning going on here, some merchandise planning going on there. And in each, they look at these trends, but they're not sharing the information."

For performance management to advance or change in retail, companies need to start viewing their employees more consistently. Further, because traditionally there has been an underinvestment in employees from a performance perspective, related compensation considerations also have been lacking.

"Much of the retail industry does not pay a living wage," said Michael Boyd, who has worked at Blockbuster, Eddie Bauer and Nordstrom corporate headquarters and now runs consulting company Customer Solutions.

"More often than not, that's one of the most challenging factors because it interferes directly with the likelihood someone is going to be a long-term contributor. The employment model that has evolved is one that tends to treat employees as a cog in a process and tries to simplify the activities that person is expected to do to the most basic level."

The Customer Service-Performance Management Connection

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