Wow. Performance Management Really Matters in Retail.
As we continue to study best-practices in talent management and talk with many organizations, we see more and more evidence that top-down goal alignment and transparency truly do drive business results.
For example, we recently had an in-depth discussion with the Vice-President of HR at Bon-Ton Stores, a highly-successful mid-sized retailer which operates among the higher performing retailers in financial performance. Bon-Ton has grown from 35 to 287 stores with more than $3.7 Billion in revenues in the last five years. The company acquired several set of high-end stores from Saks and has integrated the merchandising, distribution, and retail operations with great success.
As we discussed the organization’s keys to success, the VP of HR told us that the CEO has always paid very close attention to the development of its people. In fact, the company has developed a comprehensive, competency-based approach to recruiting, management, leadership development, and succession planning which is far more integrated than any other retailer we have spoken with.
The company prides itself on transparency (the 16 core competencies are broadly available), goal alignment, and training. Each year a set of “critical roles” are identified (there are 87 as of now), and succession plans are scrutinized for these positions. (Research members can read more about Bon-Ton and its competency model in our research library.)
After this detailed discussion I went back to our High Impact Talent Management benchmarking database and reviewed our findings about retailers. Some astounding facts came up:
Retail organizations with enterprise-wide performance management processes which are standardized and open (transparent) (approximately 21% of organizations in our database) are 47% more effective at delivering a high-performance culture than those without formal programs, and 71% more effective than those with no performance management processes at all.
All I can say is “wow.” The retail industry is one of the most difficult of all to manage: high turnover, rapid product cycles, and low margins. Yet here, as in other industries, sound people-management processes really pay off. When we refer to “transparency,” we refer to the process of clearly communicating company values, goals, and individual sales objectives across all employees, stores, districts, regions, and divisions. This is what drives Bon-Ton’s success – and many other retailers as well.
If you have not yet figured out why performance management should be a transparent, organization-wide process, you should. Read our High Impact Talent Management® research for more details.