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COVER STORY: The people gap

For an industry that has long prided itself on being a "people business," food retailing's recent track record tells a different story--one of a sector that seems bent on perpetuating a vicious cycle of focusing on today's operating efficiencies at the expense of tomorrow's front-line work force.

From a historical perspective, the baby boomer generation born between 1946 and 1965 reshaped the U.S. economy beginning in the mid-1960s with a seemingly inexhaustible supply of highly motivated workers. But their children are not numerous enough to replace them, and with the first wave of boomers set to turn 65 seven years from now, there's growing concern that the supermarket industry will be caught short when the economy rebounds.

Says Prof. Richard George, chairman of the Department of Food Marketing at St. Joseph's University in Philadelphia, "The supermarket industry is trained to respond to problems that are here right now, but since this isn't a glaring issue at the moment, most companies are looking at ways to cut, rather than to invest in, people."

George recalls a Dilbert cartoon that underscores that scenario, with the boss telling workers: "Like I've always said, our people are our most important asset, and I'm going to prove it by laying off 100 of you and watching our stock price go up." And while the gist of the cartoon is apropos, George says that rather than a string of layoffs, it's a lack of hiring that has become the order of the day in today's food retailing climate.

"In the short term, that may be fine. But in the long term, the people coming up today are the people that will be leading the industry when we have this tremendous rebound in the economy, which we inevitably will." According to George, two profound questions arise: "When we go from a buyer's to a seller's market with the work force, how well poised will the supermarket industry be to capture new talent, and where will supermarkets be in the pecking order?"

George offered a good-news/bad-news prognosis to last year's food marketing graduates. "I told them while it will probably take them a little longer to get their first job, they're going to move very quickly throughout the rest of their careers, because their fathers are retiring and there'll be tremendous opportunities."

Be that as it may, the "tremendous opportunities" are seldom explained to the majority of people who are now seeking careers rather than just jobs, says Kim Koziak, a human resources manager with CVSProcare. When viewed through the eyes of an HR professional from another retail channel, it's safe to conclude that the industry has no one to blame but itself.

"From what I'm seeing, I don't think the food industry has done a very good job of telling people about long-range career paths and opportunities to grow," she says. "And it's a big mistake," particularly in view of the lack of employment alternatives in a slow-growth economy.

The right people in place

Koziak's comments resonate loudly with George. "The industry must identify career tracks for new and prospective employees that say, 'If you come to work with us, here's what you can expect.' And I don't think we've done a very good job of that," he notes.

Several converging factors compete to explain the supermarket industry's chronic failure to tunnel out of the mine, including George's assertion that "the industry has always placed the bulk of its emphasis at the back door, which is manufacturer-driven. But as a front-door issue, it will require having the right kind of people in place with different kinds of talents than we've had historically."

Former senior retail executive Alan Tempest, who operates a brand image consultancy, concurs. "Historically, supermarkets have prospered by being able to bring people up through the ranks who started at very young ages. But because of that continual promotion-from-within philosophy, the industry hasn't had to focus on this as a major issue."

As a result, Tempest says, too many retailers have been more concerned with quick-fix survival strategies rather than with long-term planning solutions and have "totally neglected the importance of new blood and new thinking. The prevailing trend of hiring part-timers to reduce the scale of overhead," Tempest says, sends a corollary message to anybody thinking of getting into the industry: "What's the use? Where are the long-term growth opportunities?"

Significant challenges

Bruce Tulgan, founder of RainmakerThinking, Inc., a New Haven, Conn.-based consultancy specializing in workplace issues, says the industry faces a number of other significant challenges, including demographic shifts, explosive growth in the number of competitors, and its provincial approach to compensation, which heretofore has been based on hourly wages and duration of employment rather than on performance.

Given the increasing age diversity of today's work force, Tulgan says, "On one end of the spectrum, people are getting older, and on the other end, they're getting younger, while the prime age of middle managers continues to shrink."

Tulgan continues: "Many companies in this industry are still organized around assumptions about long-term hierarchical employment relationships and one-size-fits-all reward systems, work conditions, and benefits packages. But in today's environment, supervising people takes a lot more time, energy, and skill, and that's another huge factor."

Pointing to supermarket employment as the "classic local job," Tulgan, who has worked with dozens of supermarket clients, says the most "underappreciated, misunderstood job" in the entire industry is that of the store manager. "We're talking about somebody who's responsible for a multimillion-dollar business with tons of employees, in a major management role," says Tulgan, who marvels at the demanding aspects of the job.

But, by the same token, he notes, "It's also a very good job, which offers great rewards and tremendous learning and development opportunities. But I think the latter is something most people don't know about, and that's too bad, because with the huge numbers of very valuable people seeking employment today—many of whom may ultimately be a great fit—the majority won't even consider a career in the supermarket industry because of the growing disconnect with where the work force is coming from."

Poor public perception

If misery loves company, then supermarket operators may find comfort in commiserating with their restaurant industry peers, says Ira Blumenthal, president of Co-Opportunities, Inc., an Atlanta-based consultancy. "The food industry—be it restaurants or supermarkets—has not been positioned as a high-appeal, high-profile, exciting, dynamic place to work, so we have a real problem on our hands," he says.

Noting the working public's perception that the industry offers very low career advancement opportunities and very high amounts of hard work and long hours, Blumenthal, who's also executive director of the National Restaurant Association Educational Foundation's Resource Center for Workforce Solutions, says: "We have an industry that's absolutely being threatened. Why? Because aside from the already high turnover rate, poor perception, and diversity and language issues, we also have an inadequate work force to meet our future needs, and in three to seven years from now, we're not going to have enough bodies to fill the aisles, work the front end, staff the deli, and so on. And we've got to figure out a way to rise above it."

Ernie Monschein, senior director, education and human resource development, at the Food Marketing Institute, sees a "series of opportunities in the employment market. While our industry has improved somewhat from the standpoint of quantity, I'm not necessarily so sure it's improved from the standpoint of quality."

Monschein says it's now a great time for retailers "to go for quality with retail management types," in view of the ease in the labor market. While other areas of the employment sector—manufacturing, financial services, high tech—continue to be squeezed, "we're still open, so it's a great opportunity to stock up on top-quality people—be they internal or somebody straight off a college campus—who may not have as much direct industry experience" as would have been required in days gone by.

Building employer brand

Ditto for laid-off corporate managers who are having a difficult time obtaining employment in their original professions, Monschein says. "We're just starting to see the signs of an economic revival, and while it's really a jobless recovery, I think a savvy retailer can pick up some very experienced people with good backgrounds that could give them a competitive edge that they may not have been able to get five years ago."

If payroll does not allow for quantity, Monschein urges retailers to spend on quality. "Get a few good people into your organization and use them to mentor and train some of the up-and-comers that you can better afford. Forget the shotgun approach to getting more part-timers." Instead, he says, "get and train good store managers and focus your energies there."

Tulgan agrees, noting that supervisory relationships are where most workplace problems and opportunities begin and end. "Ironically, the greatest challenge is probably the least costly yet most difficult to implement" because of the hard work that's required to develop personal relationships, he says.

Further, retailers also need to determine how their staffing strategy aligns with their brand and, in turn, "build their employer brand around a high-intensity coaching-style management," Tulgan says. "The biggest mistake employers make is not having a rigorous and effective selection process and a commensurate on-boarding process."

A PR campaign wouldn't hurt, either, he says. "Certainly I think it would be in the best interest of the industry to invest in selling itself to the labor force, and while I think some efforts have been made in the past, we need to run it to the end of the race."

Advocating a two-pronged approach, Tulgan says he'd first "create an intensive organizational campaign within the industry to promote organizational development and management excellence," and would follow up those efforts "with a public service campaign for the work force to learn about the tremendous career opportunities the supermarket industry offers today, tomorrow, and next year."

Monschein says FMI has talked in the past about launching a formal PR/image campaign to communicate through the media the excitement and rewards of careers in food retailing. "We're not playing our strong suit out there from a PR standpoint, and while it would be great to do a national campaign," such an undertaking is far more difficult than it appears, he says.

'A new cure'

However, especially in local areas, Monschein advocates that grocers "get out there and tell people what an exciting profession retail management is, because if you can get strong department and store managers focusing on quality, a lot of the other challenges will take care of themselves."

Blumenthal is of the same mind. "We need to love our employees just like we do our customers, and if we do, the payback will be huge," he says. "But we can't fix a new disease with old medicine, so maybe we better turn around and come up with a new cure."

As an industry, he says, "We have been obsessed with customer satisfaction, but many don't yet understand that the road to customer satisfaction is built on employee satisfaction." Remedying the "work force crisis," he adds, "is complex, but there's a big message contained within that speaks to the need for a greater sense of hospitality, greater education and training, and a lot more focus on the employee."
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