Managers at the middle hierarchy of the firm are one of the most key resources as these are the people who are at the helm of executing the orders and taking the organizational policies forward. They act as a conduit between the senior managers and the junior level sales staff. They provide the necessary momentum and operational efficiency. Attrition issues at this level pose a grave threat to the business success which puts greater strategic emphasis on talent retention. Availability of Skilled manpower at the middle management levels has not been able to match up to the fast industry growth rate.
Similarly retaining the same in times of scarcity is also a major challenge. In reality both the issues are critically intertwined. The senior management structure of the organization is explained through the following flow chart- Pantaloon currently has tied up with 14 middle tier management institutes in the country to supply retail educated managers. It is offering permanent placements at the end of the session.
Also its parent company Future Group has started its own training and development centre (Future learning and development academies in Ahmedabad, Bangalore and Calcutta).
Though in the short term (1-2 years) it instills loyalty but Pantaloon is not able to retain them for a longer period (3-5 years). The above method of recruitment has been innovated by Pantaloon and definitely it narrows the gap at the front door but cannot completely close the gap at the back door. Hiring the right people is always core to an HR function but the critical issue is to retain the existing employee which are already trianed and that offers a challenge.
With the retail scene gaining momentum coupled with the scarcity of skilled manpower Pantaloon is poaching employees from its rival industry players like Reliance, RPG, and Shoppers Stop etc. Similarly its own trained employees are getting targeted. Also the entry of foreign players due to subsequent loosening of the FDI norms has made the largest retail player in the country to rethink its retention policy. Getting skilled people and training providence is a long term strategy. Retaining and nurturing the trained staff is the core challenge which if dealt timely can also compensate for the skilled manpower shortage.
Employees at Pantaloon are leaving not because of compensation, as it is one of the best pay masters in the industry. Other generic retention methods being widely practiced in the industry it is essential to differentiate in this case. Conclusion- Indian retail is undergoing so many rapid changes which it has never experienced before. Skilled manpower shortage and Retaining trained managers have become a critical issue for success. In the discussions Organized retail Industry resources related to Information Technology, Finance and manpower were critically postulated.
Pantaloon Retail which is the largest and the oldest retailer was put under the scanner and its Human Resource issues especially attrition and retention of its middle managerial cadre were discussed in light of its efforts and what more can be done for retention of the same. The key findings were boiled down to one single metaphor ‘Employee Engagement’. Human Resource function of the firm needs to be aligned with the overall strategy of the business. Trained Human resource is scarce in the retailing sector so managers need to be given their due share in the strategic dimensions.
They must be prepared to take on higher leadership roles with methodical succession planning and skill development. Hiring is another important area which can really work towards retaining key talent. From an unorganized player to introducing organized retail in India Pantaloon has already developed itself at the epicenter of Indian retail and is taking giant steps in to the future. The only condition is to work internally towards Talent acquisition and development. Intangibility of the retention efforts would become the differentiator factor.
Strategic human resource management- India’s retail industry is currently in an upheaval wherein there is an increased level of competition with the onset of foreign retailers. Manpower at the management level which is scarce in supply posits a formidable challenge and come out to be a key element to an organizational strategy. It’s the people at the key management positions that drive the strategic objective forward. Pantaloon which being an innovator and the largest retail operator & early starter in terms of introducing the organized retail to the country faces a major challenge in employee retention.
Being the oldest it has the largest number of retail employees, so being a target of other players is not a surprise. Pantaloon’s primary focus has been on growth and expansion given the retail scenario. This outward focus is sustainable for a shorter term period but to be a player with long term ambitions and dominance over the market it has to develop a linkage between its resources and overall strategy. To survive it has to link its business strategy to its human resources.
No organization can dream to be successful if its human resource management systems are at odds with its corporate mission and vision. Pantaloon has to communicate to its employees about how their jobs contribute to the overall organizational performance. When the employees do not feel aligned with the organization they do not feel a part of the entire strategic objective. D. P. Lepak and S. A. Snell (2002) have analyzed the characteristics of human capital through two dimensions- Strategic value and Uniqueness. Pantaloon falls in Quadrant 2 which has high strategic value and low uniqueness.
Its human resource has high strategic value as it is the largest employer of manpower and that too in an industry which is short of qualified employees and where poaching is rampant. So retail manpower becomes strategic to an organization. Low levels of uniqueness shows that the skill base is same across the retail industry. It is easy to copy and difficult to differentiate. Based on the understanding of the above model Pantaloon should integrate human resources into the strategic objectives of its businesses because in the coming times retaining human resources shall be a matter of competitive advantage.
Employees are assets and more so when they are of strategic importance. Also once the employees feel themselves as important and adding value to the organizational vision there shall be a greater empowerment and passion. Below is one of the key models which define the process of what strategy is and how it should be formulated. It applies vis-a-vis to Pantaloon. The Industrial Organization model (I/O model) – This model was introduced by J. B. Barney (1991, cited by Mellow 2006). This model suggests that a firm should focus on external environment for its strategy formulations.
These formulations have a profound effect on organizational performance. The model assumes that there are threats and opportunities in the external environment that the organizations within the environment have equal access to the resources and these resources are highly mobile between firms. This aptly applies to the human resources in the Indian Retail Industry. The model also suggests that by offering goods and services at a lower cost than its competitors an organization can be most successful. It further argues that strategy will drive resource acquisition.
Indian Retail Industry is at this juncture when it is in an evolutionary / growth phase and the model suitably describes its state of affairs. Pantaloon should focus on developing a link between its people and organizational objectives & develop trust so that employees feel valued. Strategically Pantaloon must concentrate on external environment as Human resources are in good demand in the organized retail industry. This outward focus shall build a very strong resource base for the future retail competitiveness. 2.
Career Development & Succession planning- Pantaloon is predominantly a family owned organization so succession planning is not much in vogue. All the senior ranks are filled from outside the organization. It itself explains the problems related to turnover and retention at the managerial levels. In order to design a succession system to meet the above expectations and future demands Pantaloon needs to implement the ‘five key design shifts’ as suggested by Mellow (2006:230-31)- i. Core Capabilities / Competencies- The design process should be initiated with identifying the core competencies / capabilities of the organization.
This identification shall lead to the formulation of a leadership competency model. The leadership model takes its links from the firm’s core competencies. After the identification suitable position can be developed linked to the core competencies. Similarly candidates with the required leadership traits can be identified to match single or multiple positions having similar strategic competencies. ii. Candidate Choice- The design must be such that the candidates can express their interests in pursuing the leadership track.
More diverse candidates in terms of qualifications and experience should be encouraged. They can also be motivated to take responsibility of their own career development. In certain case a capable mentor can be provided to them. iii. Competency focused development- Once the core competencies have been identified and the candidates pooled in, now comes the design phase where learning comes in. The process must be so designed that it focuses on learning of core competencies which are crucial for business success.
It encourages a feed back enabled environment by using 360 degree multi-rater development assessment system which are tried and tested and robust in nature. It would help develop multiple on-the-job learning opportunities for more broad based skills. The intense competition and rapid environment changes requires that managers and executives begin to think how the future leadership is developed. Also the entire process is so designed so as to provide the requisite learning in shorter period of time as that helps in faster implementation.
iv. Communication- In family owned organizations like Pantaloon Retail the entire process of leadership selection is kept secret and openness is discarded. This creates an atmosphere of delusion and confusion where the candidates do not know where they stand in organizational milieu and where their future lies. So open communication system needs to be encouraged. Organization should know about the process and how it works. It fosters open feedback from diverse backgrounds thus enhancing personal and professional development.
The new process needs to foster open dialogue and help individuals understand the expectations of the organization. Also it helps in propagating desired leadership traits at different levels in the organization and clearly identifies a career path. v. Continuous Review- The process design should not be a routine drab event. Rather it should be fluid, free flowing all the time by continuously reviewing its progress and keeping close watch on key results achieved. Regular 360 degree feedback must be encouraged to foster idea generation.