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We caught up with Tony Gilbert, Head of Executive and Strategic Reward at KPMG UK, about the challenges in recruiting and rewarding retail staff. Tony has been at KPMG UK since May 2015 and advises a host of retailers as part of his job. Previously, Tony held roles including Group People Director at Mothercare (November 2013 – May 2015); Director consulting across OD, Talent Development and Reward at Hay Group (January 2006 – October 2013); Partner leading Human Capital Group practice in the North at Watson Wyatt LLP (June 2000 – December 2005); and various operation, HR and IT roles at Asda (1994 – 2000).
Jamie Lawrence, Editor, HRZone: Against the increasing pressure on margins from ecommerce, how are retail companies developing their people practices?
Tony Gilbert, Head of Executive and Strategic Reward, KPMG UK: There are a combination of factors. Part of the answer is increased investment in technology to increase productivity, either through more efficient working or the need for less people. In particular we have seen delayering in middle management roles in store.
The fixed element of pay is being held down, where possible (subject to legal requirements of the national living wage), with an increase in variable and other types of lower cost and voluntary benefits.
Jamie Lawrence, Editor, HRZone: Have there been changes in the skillsets that retail companies tend to recruit for, following trends such as the need to create in-store 'experiences,' or are retailers typically looking for the same skillset?
Tony Gilbert, Head of Executive and Strategic Reward, KPMG UK: There a couple of major changes in skillset that have been happening over the last two to three years. There is a need for employees to be more digitally capable, both in store and within the head office environment.
This has implications at the front end in that employees need to be comfortable using tablets and smartphones in facilitating the customer experience. It also means that further back in the supply chain a new kind of IT person is required who is trained in new technology and not just comfortable with old ERP systems.
There is a need for employees to be more digitally capable, both in store and within the head office environment.
In addition, as in store experience becomes ever more important, the need for improved service skills grows.
This need for better technology and service skills creates a conundrum – it is difficult to continue to offer higher wages to attract the enhanced service skills in a zero inflation/deflationary environment when margins are already under pressure.
Jamie Lawrence, Editor, HRZone: With pressure on margins coming from various places, including the Living Wage introduction, how are reward strategies in retail evolving?
Tony Gilbert, Head of Executive and Strategic Reward, KPMG UK: As mentioned earlier, the fixed element of pay is being held down, where possible (subject to legal requirements of the national living wage), with an increase in variable and other types of lower cost and voluntary benefits.
In addition to this, there is pay compression at the levels immediately above those who are on the National Living Wage.
Budgets will continue to be squeezed which means that traditional learning and development will be constrained.
This means that differentials in the traditional hierarchical structure are being squeezed at the lower end of seniority. This has implications for career development structures, in that there is less incentive for people to go for progression.
Retailers are looking at areas such as Sunday and Bank holiday premium payments, geographical supplements and additional skill supplements to ameliorate the inexorable on cost.
The national living wage is currently meant to be going up to £9/hour in 2020, which is high compared to compound annual growth in low inflation/deflationary environment.
The traditional core employee attributes of resilience, ability to move at pace, service ethic, customer focus and self- motivation are unlikely to change.
Jamie Lawrence, Editor, HRZone: What do you see in the next five years for people management in retail?
Tony Gilbert, Head of Executive and Strategic Reward, KPMG UK: We are in a very low inflationary environment, which shows no sign of easing – the consumer is unlikely to accept price rises with real wages generally only growing very slowly.
Consequently, budgets will continue to be squeezed which means that traditional learning and development will be constrained.
eLearning and technology enabled employee ‘self-service’ will grow, as major productivity gains can only now really be found through investment.
The industry already has a fairly flat structure compared to other sectors.
As the national living wage grows towards £9/hour, there is a school of thought that the calibre of employee in store will rise, enhancing service levels, but this will probably be marginal as everybody will be entitled to the increase, so largely negating any differential.
There may be scope to continue to look at management layers, although the industry already has a fairly flat structure compared to other sectors.
However, in an industry which values speed in decision making, responsiveness, autonomy and accountability and is also results driven, there is always the potential to find more ways to operate leanly.
The traditional core employee attributes of resilience, ability to move at pace, service ethic, customer focus and self- motivation are unlikely to change.
Jamie Lawrence, Editor, HRZone: How are talent strategies evolving in the larger retail chains?
Tony Gilbert, Head of Executive and Strategic Reward, KPMG UK: There is increased investment in eLearning, in particular for the mass delivery of core training, such as compliance, health and safety etc.
At management level there is increased focus on horizontal collaborative skills, so that people are comfortable working across function.
There has been a sea of change over the last few years in how retailers have to operate with blurred lines between the new digital channels and traditional store delivery. The traditional functional siloed way of working is not so effective anymore.
