ECR Shrink & OSA Group
Employee Engagement Workshop
Proposal
Supported by
Background
• In September 2014, the team published a report on the
significant role that engaged employees play in improving on
shelf availability and lower shrink & waste. (See slides in
appendix and download the full report from the website)
• On November 4th, the ECR team will organise a workshop in
London to promote these findings and generate new thinking
on how to action the insights.
• This document provides more detail on the event and the
financial scenario’s.
Supported by
Speakers
• Professor Adrian Beck – University of Leicester
• Professor Zeynep Ton – MIT Sloan / Harvard
– Teaches MBA in operations management, supply chain
management, service operations, sustainability and
operations strategy.
– Published author, recipient of Multiple awards
– Author of the Good Jobs Strategy (see Appendix 2)
• TBC – Managing Director, Aldi – the role of employee
engagement in discount retailing
Supported by
Proposition
• Event title: WHY RETAIL STAFF MATTER IN THE EFFECTIVE
MANAGEMENT OF RETAIL LOSSES AND ON-SHELF
AVAILABILITY
• The Idea: An interactive workshop to learn new ways your
employees can transform the shopper experience and the
bottom line - ONLY LIMITED SPACES AVAILABLE
• When: Tuesday 4th November 2014, Goodenough College,
Mecklenburgh Square, London WC1N 2AB
Supported by
Target Audience
• Retailers
– Human Resources, Loss Prevention, Store Operations, Customer
Service, Senior Management
• Solution Providers
– Gallup, Checkpoint, Training organisations, Recruitment organisations
• Investors / Academics
Supported by
Agenda - Morning
09.30 Coffee and Registration
10.00 Introductions & Workshop Expectations - John Fonteijn/Colin Peacock
What can you expect to learn over the day? What would have to be true for you to say “wow! that was a most excellent
day and superb investment of my precious time!”
10.15 Employee Engagement – Making the Link to Increased Sales and Lower Losses - Professor Adrian Beck
How much will on-shelf availability improve and retail losses reduce if employee engagement increases? What are the
key management, interventions that can improve employee engagement? How can these insights be turned into
practical short and long term retailer actions?
11.00 Questions & Answer Session with Professor Beck – Employee Engagement and Retail Losses
11.15 Refreshment Break
11.45 The Good Jobs Strategy: Professor Zeynep Ton
What do Bad Retail Jobs Look like? How do you deliver Good Retail Jobs in Low Cost Retailing? What are the benefits of
Good Retail Jobs? Zeynep will share real world learnings and business results from four “good jobs” retailers: Costco,
Mercadona, Trader Joes and QuikTrip
12.30 - Question & Answer Session with Zeynep Ton - The Good Jobs Strategy
12.45 - Lunch
Supported by
Agenda - Afternoon
13.30 Employee Engagement Best Practice, George Gabriel, Living Wage Foundation and TBC Retailer Speaker
What is the Living Wage Foundation? What the benefits of the Living Wage? Hear from one major retailer on how the
Living Wage is improving their organisation and their business results
14.15 - Question & Answer Session with Living Wage Professor Beck - Employee Engagement and Retail Losses
14.30 - Coffee and tea
14.45 -So what? What can I do next? An Interactive Round Table Session facilitated by Professor Adrian Beck
What were the new ideas your table heard today? What were the practical lessons that you could reapply? What would
have to be true in your organisation to make these ideas come to life?
15.45- Workshop Feedback
John Fonteijn/Colin Peacock
Did we deliver what you expected? Did we meet your expectations? What are your next steps?
16.00 - Close
Supported by
Pricing
• £390 (€490) includes:
– Full day content & takeaway hard copies
– Refreshments & Lunch
• Bookings Payments online by card or bank transfer via
dedicated website
http://s541599729.initial-website.co.uk/
Supported by
Marketing
General Coverage
EE Study Press
Coverage/Media
Partners / Book
Publishers
Living Wage/Gallup,
Sponsors
ECR /
Eurocommerce
Supported by
Finances
• Committed Costs of Running Event – circa £14,000 (venue
hire, website, salaries of organisers, etc)
• Requires 37 delegates to break even – need your feedback
and support please
• Note: 50% of any surplus generated will be re-invested in
further ECR research – the other 50% is the incentive for the
agency organising the event.
Supported by
Appendix 1
Employee Engagement Research
Supported by
Employee Engagement Study
How improving employee engagement
can transform retail profits through
improved availability and lower losses
Photo courtesy of James Lee:
https://www.flickr.com/photos/124961070@N02/14485059353
Supported by
Contents
• Research Objectives & Methodology
• Key Findings
• Indicated Actions
Supported by
Research Objectives
1.
Do Stores with Lower Employee Engagement have:
1.
Higher Out of Stocks
2.
Higher Waste?
3.
Higher Shrink?
4.
Higher Cash Losses?
2.
If yes, to what extent can lower employee engagement explain any difference in out of
stocks, known loss [waste], unknown loss [shrink] and cash loss?
3.
What would be the impact in terms of savings and profit improvement if retailers could
improve employee engagement in the quartile of stores with the lowest employee
engagement?
4.
What are the actions retailers could take to deliver improved employee engagement?
5.
How can retailers get started?
Supported by
Methodology
•
Analysis the completed employee engagement questionnaires of over 200,000 store
associates working in 1,570 stores for 3 European Grocery retailers with combined sales of
over €35BN and a 4% share of the total European Grocery Retailer Market.
•
Consolidate the 110 unique questions into 4 logical categories:
– Management
– Contribution
– Environment
– Organisation
•
Apply statistical methods to identify the “power” of employee engagement in explaining any
variation in out of stocks, known loss, unknown loss and cash losses
Supported by
Example
Retailer
1
2
Original Questions
I feel appreciated by my manager when I
have done a good job.
I feel valued for the job I do.
I get thanked for a job well done.
I feel appreciated for the work I do.
3
Supported by
Composite Question
My manager praises me when I have done a
good job.
Staff feel appreciated and valued.
Findings
1.
Do Stores with Lower Employee Engagement have:
 Higher Out of Stocks? - YES
 Higher Waste? - YES
 Higher Shrink? - YES
 Higher Cash Losses? - YES
Supported by
Out of Stocks Twice as High
Average Out of Stock Rate in Quartiles 1-3 Vs the Out of Stock Rate
in Quartile 4 (Quartile with the Lowest Employee Engagement)
10.00%
8.90%
9.00%
Out of Stock Rate
8.00%
7.00%
6.00%
5.00%
4.80%
4.00%
3.00%
2.00%
1.00%
0.00%
Average Quartiles 1-3
Supported by
Average Quartile 4
Waste Twice as High
Average Waste Rate in Quartiles 1-3 Vs the Waste Rate in Quartile 4
(Quartile with the Lowest Employee Engagement)
3.30%
3.50%
Waste as % of Sales
3.00%
2.50%
2.00%
1.50%
1.50%
1.00%
0.50%
0.00%
Average Quartiles 1-3
Supported by
Average Quartile 4
Shrink Three Times as High
Average Shrink Rate in Quartiles 1-3 Vs the Shrink Rate in Quartile 4
(Quartile with the Lowest Employee Engagement)
1.80%
1.60%
1.60%
Shrink as a % of Sales
1.40%
1.20%
1.00%
0.80%
0.50%
0.60%
0.40%
0.20%
0.00%
Average Quartiles 1-3
Supported by
Average Quartile 4
Cash Loss Seven Times Higher
Average Cash Loss Rate in Quartiles 1-3 Vs the Cash Loss Rate in
Quartile 4 (Quartile with the Lowest Employee Engagement)
0.08%
0.07%
Cash Loss as % of Sales
0.07%
0.06%
0.05%
0.04%
0.03%
0.01%
0.02%
0.01%
0.00%
Average Quartiles 1-3
Supported by
Average Quartile 4
Findings
 Yes using regression analysis, the research has found that
employee engagement can be a very powerful explanation
of the variance in loss, especially out of stocks, where 42%
of the variance can be explained by the employee
engagement score
Supported by
Correlation
Supported by
causation
Out of Stocks
42% of the variation in Out of Stock Rate in Quartile 4 Vs Quartiles
1-3 can be explained by employee engagement.
10.00%
8.9%
9.00%
42%
Out of Stock Rate
8.00%
7.00%
6.00%
4.8%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
Average Quartiles 1-3
Supported by
Average Quartile 4
Waste
17.8% of the variation in the Waste Rate in Quartile 4 Vs Quartiles
1-3 can be explained by employee engagement
4.50%
4.00%
3.3%
Waste as % of Sales
3.50%
17.8%
3.00%
2.50%
2.00%
1.5%
1.50%
1.00%
0.50%
0.00%
Average Quartiles 1-3
Supported by
Average Quartile 4
Shrink
Shrink as a % of sales
19% of the variation in the Shrink Rate in Quartile 4 Vs Quartiles 1-3
can be explained by employee engagement
2.00%
1.6%
1.50%
19%
1.00%
0.5%
0.50%
0.00%
Average Quartiles 1-3
Supported by
Average Quartile 4
Findings
 Good news! If retailers could improve employee
engagement in the quartile of stores with the lowest
employee engagement they could increase profits by
€380MM
Supported by
€380MM savings
Improving Employee engagement in the just the bottom quartile of
stores could deliver €380MM in new savings for the European
Grocer Sector, equal to a potential 1.6% increase in profits
€380MM
Supported by
€24,353MM
$24,353MM
Estimated Current Profits
Estimate New Profits with Savings
Findings
 More good news: There is much that the retailers could do
to deliver improved employee engagement
Supported by
Possible Actions
• The team responsible for profit improvement / loss prevention to share these
findings with the leaders of the Human Resources / Personnel functions and
together build awareness from the C Level and down on the significance of
employee engagement – where relevant, execute their own lower quartile
improvement plan.
• Leverage “role model” store managers to share their “habits” to inspire the others
via interactive and dynamic training programmes
• Reward good performance, even if it is only in the form of a regular “thank you” –
create simple tools & techniques to facilitate this behaviour change
• Embed these learnings in existing or new store manager training programmes
Supported by
Possible Actions
• Retailers to analyse the existing employee engagement data available for their
store associates to establish the statistical significance of employee engagement
in explaining variation of losses – develop size of prize model – what if….
• Retailers to review Store Management promotion/selection process and capacity
to deliver employee engagement – identify training / mentoring plans
• Retailers to reflect on how their business:
- Communicates change – full, part time and temporary staff want to know
what is happening and why – “Tell Justin” campaigns
- Creates opportunities for future development – career planning
- Creates a feed back loop from all staff and store managers – employee
engagement as a new metric for store managers?
Supported by
Findings
 Finally Here are three immediate suggested actions that
Retailer CEO’s could set for their organisations..
Supported by
Three Immediate CEO Actions
1.
Share these findings within your organisation and across functions, especially
Human Resources, Profit Improvement / Loss Prevention and Store Operations.
2.
Set the expectation that each function should brainstorm possible “solutions” to
deliver short and longer term wins…
3.
Set a time plan, key milestones and accountable individuals.
Supported by
Summary Findings
• In the stores with the least engaged employees on-shelf availability, waste, shrink
and cash losses can be 2-3 times higher than the average.
• The Store Manager is critical in improving the levels of employee engagement –
simply saying “thank you” can make a big difference.
• By improving employee engagement in just the lowest quartile stores, the potential
savings of €380MM for European Grocery retailers is significant.
• There are many possible actions retailers could take to act on these insights
• Retailer CEO’s could start by tasking their each function in their organisation to
think differently about employee engagement and to request accountable
individuals lead brainstorming events to generate actionable ideas.
Supported by
Appendix 2
Supported by
Speakers
•
•
•
•
•
Almost one in four American working adults has a job that pays less than a living wage. Conventional
wisdom says that’s how the world has to work. Bad jobs with low wages, minimal benefits, little training,
and chaotic schedules are the only way companies can keep costs down and prices low. If companies were
to offer better jobs, customers would have to pay more or companies would have to make less.
But in The Good Jobs Strategy, Zeynep Ton, a professor at the MIT Sloan School of Management, makes
the compelling case that even in low-cost settings, leaving employees behind—with bad jobs—is a choice,
not a necessity. Drawing on more than a decade of research, Ton shows how operational excellence
enables companies to offer the lowest prices to customers while ensuring good jobs for their employees
and superior results for their investors.
Ton describes the elements of the good jobs strategy in a variety of successful companies around the
world, including Southwest Airlines, UPS, Toyota, Zappos, and In-N-Out Burger. She focuses on four model
retailers—Costco, Mercadona, Trader Joe’s, and QuikTrip—to demonstrate the good jobs strategy at work
and reveals four choices that have transformed these companies’ high investment in workers into lower
costs, higher profits, and greater customer satisfaction.
Full of surprising, counterintuitive insights, the book answers questions such as: How can offering fewer
products increase customer satisfaction? Why would having more employees than you need reduce costs
and boost profits? How can companies simultaneously standardize work and empower employees?
The Good Jobs Strategy outlines an invaluable blueprint for any organization that wants to pursue a
sustainable competitive strategy in which everyone—employees, customers, and investors—wins.
Supported by