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The retailer’s layoff dilemma

How to avoid layoffs in supply chain, HR, IT, and other support functions

Jennifer Diamond | December 29, 2015

Retail’s swooping cycles can be murder on a retailer’s organization.

Questions of how to scale, what to do in downturns, and how to handle the seasonal tides of hiring and lay-offs require an intense look at the business functions that operate two degrees away from the retail front lines.

Retailers, and other customer-focused organizations, have a habit of dividing customer-service functions (such as sales, marketing, and brand management) and support functions, such as supply chain, HR, and IT. This habit doesn’t just result in layoffs—it hurts the customer experience.

It’s time we rethink this “two degrees of separation” from the customer. Doing so requires a four S conversation around service, strategy, skills, and scalability.

Retailers have a habit of dividing customer-service functions and support functions. This doesn’t just result in layoffs—it hurts the customer experience.

The 4 S conversation

The four Ss—service, strategy, skills, and scalability—streamline an organization’s focus, tighten the customer delivery conversation, and open up room for the enterprise to enhance customer relationships, all of which benefit the brand over time.

Here’s how it works:

  • Re-aim support functions toward being of service the customer, by degrees of separation, but always toward the customer.
  • Align conversations about strategy with the first degree functions, ensuring that whether directly or indirectly, support functions anchor delivery road mapping in customer delivery-oriented capabilities.
  • Build out team dynamics, including skill development, performance, and measurement, based on a shared understanding of business pressures, nimble cross-reliance, and end customer focus, no matter what the work is.
  • Structure teams toward the customer to make scalability and agility natural and anticipated, instead of in response to financial pressure.

S no. 1: Service

Let’s start with service. After all, that’s what retail is all about.

But for our two degrees of separation support functions—such as HR, supply chain, and IT—being a service-minded function can be a conflict all its own.

So remember: Being service-oriented does not diminish the importance of who you are or what you do—it enhances it. So own it—it will help to constantly remind you and your team of your values, your goals, and your mission.

For example, consider this supply chain operation mission statement: To deliver world class procurement, manufacturing, logistics, and fulfillment quality and to command leadership respect within the entire vertical value chain.

There are some problems with this [rather extreme] example. What’s missing? Well, everything that matters unless we are a pure supply chain company. Quality is important, but every function—even those two degrees functions, like supply chain—must acknowledge their relationship to the brand promise being made to the end customer.

Let’s take a stab at reworking that supply chain mission statement: To fulfill the ethical, efficient, and sustainable product sourcing, manufacturing, and fulfillment promise we make to our customers every day, through collaboration, expertise, and adaptability.

Now that’s a different conversation, rooted in service to the customer through the organizations we collaborate with, whether internal or throughout the value chain of products and services we sell. This grounding in service resets the tone. We can apply that line of thinking to any of our two degrees of separation teams.

S no. 2: Strategy

Strategy, like service, is grounded in the customer. And defining a relevant strategy requires collaboration with the front line, or customer service, functions.

Let’s take IT as an example.

This two degrees function must balance customer-facing initiatives with the underlying technical roadmap to enable them, but the conversation has to be about enterprise capabilities. Everyone in the IT org must arrive at a shared understanding of the what and the why in the context of the customer experience.

Without that connection, it’s far too easy for IT investment and growth to become disconnected from the company’s rhythm of customer engagement. In contrast, when support functions are connected to the customer and other business functions, they remain an integral part of the brand promise to the customer.

S no. 3: Skills

Service mission—check. Strategic roadmap—check. Next up: skills.

Help ensure that team members stay relevant and curious. Each member of the team must understand the service and strategy elements, and play a role in fulfilling the promise—whether front lines or two degrees from the customer. That means keeping a learning organization focus, with a hard lens on skills and capabilities, measures that matter, openness, and creativity to find even better ways to serve within the strategy.

Teams must be able to flex, grow, and anticipate. Yes, that’s a change in how we talk about results, performance, and sharing success. Org design, succession planning, and learning and delivery goals represent a huge opportunity for the strategically-aligned service function.

Let’s imagine, for example, an HR team that not only operates in this way, but also helps other functions stay true to those ideals. That team isn’t just an enterprise enabler—it has the potential to be a brand differentiator as well.

Now imagine a company-delivered training program for sales associates offered by corporate trainers who have done rotations on the sales floor to build their own knowledge, test the concepts they’re teaching, and build their credibility as a service provider—resulting in far better delivery and effectiveness. That’s two degrees of separation at its finest.

S no. 4: Scalability

Now we get to it—the part where we really do prevent layoffs.

We address scalability last, because otherwise, we’d be addressing the symptoms and not the causes. Annual layoffs in retail are a reaction to a down drift in business coupled with bloated support teams that have strayed from corporate alignment. So, how can we prevent that imbalance?

First, reset the links between functions—tying them together with a service-orientation and aligned strategies. Then, manage people and results differently. Lastly, take a close look at how your organization works.

Nimble, aligned, customer-focused support functions

In nimble, aligned organizations, two degrees functions are defined by the front line functions they support.

That looks like the IT development team aimed at the business teams who use their tools, ready to queue and prioritize what is being requested by primary customers of their services. The logistics teams pointed to the sales channels they support, while still providing the holistic network optimization needed to maintain a nimble delivery chain. And the HR functions that partner with customer teams to provide uniquely crafted solutions while collaborating on enterprise-wide standards.

Customer service foundation across the organization

This isn’t just the same old centralized versus decentralized debate—it’s about how we sell to customers. Local with an international reach. Around the corner and around the world. Being personal in our customer relationships while being robust in our customer satisfaction—all retail functions must support that path.

That path applies the basic customer service questions across the entire organization:

  • Are we focusing on the things our customers find relevant?
  • Can we define the customer value proposition for what we are doing?
  • Are we ensuring that our teams can switch gears and have the agility to transform if the business requires it?
  • Can we envision ourselves larger? Smaller? Do we know what we would not do if resources were limited or reduced?

Being comfortable discussing and answering these questions as teams, not just behind closed doors, is a culmination of the four Ss of the two degrees functions. Truly engaged support teams are characterized by team members who own the understanding of the pressures of the business, the opportunities to serve, the implications of losing touch, and the connection to the end customer—exactly what every retailer needs.

Jennifer Diamond

Jennifer Diamond is a principal consultant in Slalom Seattle’s Retail practice. She is passionate about helping retailers and retail-focused companies focus on fulfilling the customer and brand promise from everywhere in the organization. Connect with Jennifer on LinkedIn.


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