This dissertation considers training and its impact in the retail sector, concentrating primarily on fashion retail. It includes an extensive review of available literature on training within the retail industry, with emphasis on its impact on areas of the human resource audit, including culture and staff. Further emphasis includes profitability considerations and the impact of training initiatives on strategic change within an organisation.
This study compares findings from literature with case studies of successful retail training programmes at Arcadia, New Look, Marks and Spencer, and Budgens. Findings are used to develop recommendations for future training initiatives and strategy within the sector.
In business, particularly in the fashion retail sector, staff play an integral part of both the marketing and overall success of the firm. While it is important to hire qualified and reliable staff, it is equally important to provide initial and regular training for all personnel within the organisation. Some companies provide such training; others provide little of none. Many firms in the retail fashion sector hesitate to invest in training due to high employee turnover, and cost is a factor in any training offering.
The likelihood of staff receiving training depends upon the size and nature of the business, the positions and previous education of the personnel receiving training, and the culture of the organisation. The issue is made more complex by the various types of training methods available. It is imperative that companies tackle and master the training issue, however, to both operate efficiently and to achieve their greatest potential success.
This dissertation will seek to examine and evaluate current and past training initiatives in the retail sector, primarily the fashion retail sector, with particular emphasis on the effect of training on the overall organisation. The relation of training to current and future success factors, including its impact on company strategy and strategic change, are given special consideration. A review of literature will establish a broad overview of effective training in the fashion retail arena, with emphasis on the types, frequency, duration, and content of training found to be most effective in previous research.
The impact of such training on companies’ culture, turnover, and profits, in addition to strategy and future growth, will be considered. Four case studies of successful retail training programmes are highlighted in this analysis: Arcadia and New Look, fashion retailers, Marks and Spencer, a department stores with strong fashion departments, and Budgens, a food retailer. Brief overviews of the training programmes undertaken by each of these companies are included in appendices at the conclusion of this dissertation.
Findings of this dissertation compare data from the literature review and case studies with statistical information from the Chartered Institute of Personnel and Development (CIPD), which undertakes a wide, empirical study of training and development across the United Kingdom annually. It is anticipated findings and trends identified by CIPD will be similar to those within the fashion retail sector, and can assist in developing recommendations for future training initiatives and strategy within the sector.
Training is such a vital part of most businesses that quite a significant amount of research has been done on training in general, although there is not a large amount of literature about training particular to the fashion retail sector. This is somewhat surprising since, outside the public sector, retailing is the UK’s largest employer, employing three million workers, or nearly eleven percent of the entire labour market (Matthews 2004). This literature review seeks to consider such research and highlight the points specifically relevant to a retail fashion firm. First, a general overview of business training as presented in available literature is undertaken.
The types of training currently in use and their effectiveness, the most common and profitable frequencies and duration of training, and the content of training programmes will be considered with the aim of creating a broad definition of effective training within the fashion retail sector. In addition, also examined in current literature are the impact of training on the human resource audit, with culture, turnover, and profit being the three main areas of influence, and the impact of training on long-term corporate growth, including strategic changes.
A number of different types of training programmes have been used effectively in the retail sector. On-the-job training involves instructing employees at the workplace, and while generally limited to job and store-specific tasks, is highly effective (Dolton 1993). Classroom instruction is offered in a wide array of lengths and formats, and has historically been the method used to communicate product and organisational information, and to teach soft-skills. Instructors may be in-house or external training providers (Pollitt and Webb 2003). Online instruction, which presents classroom-type information in self-paced modules via the Internet or company-provided software, is becoming increasingly popular for certain skill sets (Haeberle 2003).
A retreat-centred training scheme, where employees participate in some combination of the above with role-play and bonding activities, such as outdoor adventure courses or sport, is also sometimes utilized (Anon 2002). Some organisations match senior executives or upper-level workers with more novice employees in whom potential is recognised. Such mentoring programmes have been found to be quite effective in training staff (Odiorne 1970). Coaching as a training offering is similar in implementation to mentoring, but deals with more functional skills (Pettit 2004). Finally, some firms send workers to outside training avenues, such as local universities or union offerings (Booth and Chatterji 1998).
On-the-job training is by far the most popular and practised form of vocational instruction, used by a reported eighty percent of businesses (CIPD 2002). It is Britain’s historic training method, dating back to the apprentice system used here for hundreds of years (Dolton 1993). Over half the respondents to the Chartered Institute of Personnel and Development’s (CIPD) survey of training in business rated it as their best learning method (2002). It is important to differentiate, however, between true on-the-job training and the “sink or swim” method, where an employee is just thrown into a new situation with a hope for the best (Plimmer 2004).
This leaves the employee to find whatever training they can, including trial and error. OJT can also vary significantly from store to store, particularly in organisations without an overarching training plan (Cummings 2004). Both these employees and their firms would be far better served if the firm were willing to make a reasonable investment in training (Odiorne 1970).
Successful on-the-job training, however, can provide effective instruction in concrete skills needed in everyday job performance, enhanced skills such as handling conflict so important when dealing with the public as do most retail staff, and information and insight into company culture and goals. These cannot be learned in a generic educational environment, such as school or university. Retailers “require specific skills which cannot be provided by general-purpose education,” and must be acquired either on the job, through company-oriented instruction, or a combination of the two (Acemoglu and Pischke 1999, F112). Therefore, it is imperative that retailers devise training programmes for new staff; particularly effective are programmes with “specific, monthly goals that include mentors and accountability” (Cummings 2004).
Classroom instruction is almost as varied as on-the-job offerings. These can range from brief “training meetings” of a few hours or less at the job location, to university programmes of several years or more paid for by the company for employees. The typical full-day or part-day course lasts one to three days, while the typical evening course lasts for four to six weeks (Perdue, Ninemeier, and Woods 2002; Anon 2005). These may be offered by private training firms or the company itself, and are often held on company premises. Many larger firms have developed highly effective “workshop” type classroom offerings, which provide specific instruction to a group of employees at a company facility for one to three days. Smaller firms are more likely to send individual employees out to generic courses offered by training professionals than develop their own training schemes (Anon 2003).
Many companies have begun implementing modular computer-based courses, typically offered at training centre operated in part or whole by the retailer, or over the Internet. Forty-one percent of sales executives surveyed from various businesses including retail reported using online learning in some form to train sales staff (Cummings 2004). The benefits of this type of training method include a consistent level of training delivery, efficient and time-effective instruction for the worker, and the near elimination of the travel costs typically associated with classroom training methods (Haeberle 2003). Computer-based courses also have a standardised content, and can offer a variety of learning options, such as simulations, role-play, quizzes, and other learning aids (Hoch 1994). Haeberle (2003) reports a significant advantage of online training is “that retailers will be able to provide a consistent level of training to all of its associates across the globe,” an increasingly important issue as many retailer expand into other countries (69).
These programmes are most effective if the training provides for someone to handle questions that arise (Humphreys et al 1995). One of the strongest features of online training is the ability of learners to work at their own pace. If a person does not understand or has difficulty with a lesson or section, they can repeat it as often as they require. Computer-based training can also provide greater accountability, with tracking available to make sure employees actually take the course. Often, managers are under pressure to get people to the sales floor quickly, especially in peak retail seasons. Managers can fudge the results in paper-based or in-store classroom training, but not in online instruction. Online, someone must spend the time to complete the training module, which makes it much more likely the employee in need of training will actually do so (Haeberle 2003).
Some training schemes combine classroom instruction with bonding activities in an effort to solidify team concept and attitude amongst workers. These types of trainings are usually provided at the management level and above due to cost considerations. A typical retreat-centred training scheme includes instruction in subject area, followed by situational exercises reinforcing that subject. Actors are typically hired to play roles other than those of the managers in training (Anon 2002). Odiorne (1970) showed that effective management training requires linking managerial concepts with real-life situations, and this type of training allows managers to practise just that but in a supervised environment with feedback and low risk.
At some point during the retreat, employees participate in bonding activities such as sports or adventure activities, which serve to help participants get to know each other and practise team concepts presented earlier (Anon 2002). Training retreats have also been used effectively for teaching of brainstorming and other creativity and idea-generation methods (Pollitt and Webb 2003).
Mentoring programmes, where upper-level employees meet and work one-on-one with lower-level employees, have been long known to be an effective training scheme (Odiorne 1970). Mentors typically concentrate on long-term, career development areas of personal improvement, as opposed to coaching, which concentrates on specific short-term needs and skills (Pettit 2004). In addition to being effective, mentoring is time effective, with mentoring pairs meeting as often as once a week but more often six to twelve times per year (Pettit 2004). Unfortunately, due to the training and oversight required for proper implementation, most companies have been unable or unwilling to enact formal mentoring programmes (Harding 1991). However, this is slowly changing; recent surveys revealed there are currently more than 5500 mentoring pairs of managers in 1200 companies in England and Wales, with the number expected to increase substantially in the next ten years (Pettit 2004).
Coaching is also increasingly popular as a training method, for reasons similar to mentoring. This training method “has experienced the largest increase in usage in the last few years, compared with other forms of training provision” (CIPD 2004, 3). Coaches help workers devise specific learning goals, usually skill-related, and create a plan to achieve these goals. The coach then provides guidance and support to the worker as he or she pursues the plan (Pettit 2004). Ninety-nine percent of CIPD (2004) respondents considered coaching able to “deliver tangible benefits to both individuals and organisations,” and that it is most effective when used to “embed external learning from training courses” (24).
Because external courses are offered to a broad student group, they can provide quality trainers at a lower cost (CIPD 2004). Most universities have some type of classroom offering in management, business, or retail subjects available in a lifetime-learning scheme. Similarly, courses are designed and offered by private training companies, sometimes at the company site, but also often in hotels or conference centres where a number of smaller companies have the option to send staff (Spearhead 2005). Unions both offer generic courses for members, and are partnering with various employers to offer training programmes.
These typically include study in basic maths and English in addition to job-related skills, which is important, as an estimated thirty-five percent of British workers are in need of remedial work in one or more basic subjects (Kent 2005). For example, “at Littlewoods, an intiative originally created through the Union Learning Fund has grown to include the provision for an on-site learning centre managed by a steering group made up of representatives and the employer” (Kent 2005). The training is not of great cost to the company, although is has given up space for the initiative. Technology has been provided by a local college, and employees are not paid for their time taking courses (Kent 2005). The centre provides a wide variety of training offerings, including instruction in basic skills.
Training frequency and offering also vary from organisation to organisation and sector to sector. In general, however, seventy-two percent of workers receive some form of training each year (CIPD 2002).
Most businesses provided specific provision for training in their corporate policies, including how often and what types would be made available, and at whose cost. Sixty-three percent of all employers in business (not just those in the retail sector) had a training plan of some such kind, while fifty-three to eighty-one percent had specific budget allocations for training, depending on business sector (Jameson 2000, CIPD 2004). External courses and conferences were most likely to be covered in training budgets and plans, with external trainers and books and manuals a close second at eighty-five and eighty-two percent, respectively (CIPD 2004).
Training programmes were more likely in larger organisations, of whom almost all had a plan or scheme of some kind, and less prevalent in small firms, of whom only twenty-eight percent had some sort of training provision (Jameson 2000). Most companies recognized the need for ongoing training, even if they did not make provision for it. “New technologies and organisations require continuous learning” (Acemoglu and Pischke 1999, F112). For example, the typical retailer will roll out a number of new products each season, and sales floor staff, online order takers, customer service representatives, and managers must all be brought current on the new products so they can provide appropriate customer service to their customers.
The most common regularly offered training programmes are not brand updates, however, but induction training for new employees (Deardon, Machin, Reed and Wilkinson 1997). In the retail sector, this typically include one to five partial or full days of classroom based or online coursework, followed by a period of mentored or supervised on-the-job training (Troy 2004). Staff hired for seasonal or short-term positions generally received less training (Foy 2004). Recent graduates preparing for management positions often trained and worked a number of positions within the store to gain experience and real-world understanding before assuming a management role (Troy 2004). Over seventy-five percent of CIPD (2004) respondents favoured short training sessions of increased frequency for ongoing training or instruction to prepare workers for promotion.
Harding (1991), in a wide survey of management workers, found that they themselves felt training was most effective when delivered in small “chunks,” typically one day or less. A number of retailers employ this type of training scheme (Reade 2005). Ideally these chunks should be provided at regular intervals, such as once a month, over a longer period of time. Most managers preferred progressive training, where one unit built on some or all of previous units.
Some managers also indicated they were more likely to attend training provided outside the store, as offerings on site were more likely to be interrupted with emergencies and store concerns (Harding 1991, Humphreys et al 1995). Companies also indicated a preference for shorter, modular training; many firms hesitate to pay for training of a longer duration for fear that employees will be poached by other firms and they will lose their investment (Benady 2005).
Employees were sometimes unable or unwilling to participate in training. When turning down such opportunities, most cited time commitments such as “too busy at work” or “family and personal commitments” (CIPD 2002, 3). It is important that companies consider the other time constraints on employees when scheduling training offerings.
Skill content is typically divided into two areas: general and specific. General skills include basic academic proficiencies such as reading, writing, and math, as well as skills easily transferable from one employer to another, such as interpersonal communication. Specific skills are only useful with one employer, such as an understanding of how a particular retailer handles product returns (Dolton 1993).
Specific skills are more likely to be featured in employer-sponsored training CIPD (2004) survey respondents reported the top benefits of any type of training to be “connected with improving skills directly related to immediate job demands (2). Firms are more willing to invest in specific training, because it is viewed as of greater benefit to them (Dolton 1993). The more ‘firm specific’ an employee’s training, the less likely they are to leave the firm, as their experience has greater economic value with that specific employer (Dolton 1993). For example, chocolate manufacturer and retailer Thorntons developed a brand training programme to combat falling sales.
The programme will help staff “improve their specialist knowledge about the 400-store chain’s products (Kleinman 2003). This type of training has little value apart from the Thorntons stores. Littlewoods addressed its lack of training by designing a nine-month training programme entitled “Hooked on service.” Staff will attend one modular training programme each month, focusing on “one aspect of their job, such as fitting-room etiquette, or tills, and keep the course short, sharp, practical, non-fancy, and fun” (Reade 2005, 2). The more experienced and knowledgeable the initial hire, the less general sector training is required (Clements 2003). Due to this, many employers now require some sort of general skills test as part of their hiring process (Clements 2003).
General training is also available, although less common, in the retail sector. It is typically not offered by solely by the retailer, however, with the store usually partnering with some other organisation to provide needed instruction. One line of argument for why companies rarely offer general training on their own holds that “firms can never recoup their investments in general skills, so they will never pay for general skills training” (Acemoglu and Pischke 1999, F113). There is research, however, that has indicated “firm-sponsored investments in generals skills are wide-spread” in the business world (Acemoglu and Pischke 1999, F116).
A number of firms have partnered with other organisations to provide such general training offerings. These training centres provide a combination of general vocational, retailer specific, and lifelong learning courses. Life-long learning, including training in a variety of areas for personal growth rather than enhanced job performance, tends to be supported verbally but not financially by employers. Companies are happy to have their workers continued learning, but if it has not impact on their bottom line, they are unlikely to foot the bill (Forrier and Sels 2003). Union or government investment greatly increases the likelihood that firms will offer general training on any widespread basis (Booth and Chatteriji 1998).
General training is a need across the workforce, however. The Government Basic Skills Unit reports that fifteen percent of British adults have literacy issues, while nearly a third struggle with poor numeracy skills (CIPD 2002). Lower class or entry-level workers have also be identified as needing significant investment in soft skills, such as interpersonal communication or conflict resolution. Lack of training in these basic areas greatly inhibit the chances of lower class or poorly educated workers from advancing in their careers, or from being able to take full advantage of some training offers they may receive (Kent 2005).
A number of companies have instituted training resulting in some type of certification such as National Vocational Qualifications (NVQs), which are extremely popular with employees (Morley 2002, Anon 2002). For example, BP made its training course “Developing People” more attractive to employees by providing those who successfully complete it the chance of attaining a National Vocational Qualification (Anon 2002). The company attributes the NVQ as one of the components that increase employee participation, and cites enhanced credibility for the training scheme as an additional benefit (Anon 2002).
More than 2500 BP employees are currently reported to be studying towards their NVQ through the Developing People programme (Anon 2002). Selfridges worked closely with the Sector Skills Council’s Skillmart creating, amongst other things, a level two certification in retail skills. The certificate is based on National Occupational Standards for retail, and is considered a “demand-led, flexible, competency based qualification” (CIPD 2004, 33).
The most effective method of training is often situational, individual, or a matter of opinion. Most CIPD survey respondents reported, however, “being shown how to do things then practicing them” was the most effective method of training, with over fifty percent choosing this training method (CIPD 2002, 7). “Being taught in a meeting room or classroom situation” and “Learning from collegues and other people you work with” were a distant second with just over fifteen percent each, while less than ten percent of respondents preferred books, videos, online, or correspondence courses (CIPD 2002, 7).
While training method, frequency, duration, and content will vary greatly depending on the training objectives pursued by an organisation, there are some general parameters that define effective training. First, training content and delivery must ultimately be in the best interest of the organisation and used to further organisational goals. It is of course preferable that both the employees’ and organisational needs are met; however, “effective training frameworks have to be driven primarily by business needs and support an organisation in adapting to the future needs of its market place” (Morley 2002, 12). Benady (2005) quotes Matt Atkinson, CEO of marketing agency EHS Brann, as stating that training “must support the business objectives and the company’s purpose, outlining a direction for the agency” (41).
The senior level of management, therefore, will layout the overarching goals of effective training and its role within the organisation. Wise management, however, not only provides a system for gathering information and suggestions from all its employees, but actually pays attention to these suggestions and information when developing overall strategy, including training (Styles and Goddard 2004). “This means finding out how staff are faring, whether they are hitting their targets, which things are working and which are not,” before planning or updating a training programme (Benady 2005).
In addition to consistent, supported training objectives, content and delivery must be provided in an orderly and effective manner. Unfortunately, many retailers lack such a cohesive, standardised training programme. “If you think about how many employees a retailer has that interact with a customer, most likely they have all had a different training experience” (Haeberle 2003, 69). This training scheme must not only be standardised in its content, but in how it is utilised at the individual store level. “Time and time again the best HR policies fall down because managers lack the skills to put policy into practice” (Reade 2005, 2). The best programmes will deliver a consistent message in the most effective way for the workers to be trained, do so consistently throughout the retailer’s locations, and provide some method of assessment and accountability for the training’s effectiveness (Haeberle 2003).
Effective training, therefore, will provide instruction in areas of value to both the employer and employee, in a manner that reinforces the overall goals and strategy of the organisation. It will be regular and standard throughout the organisation, and will be subjected to continuous improvement principles such as assessment of effectiveness.
Effective training will impact the culture of an organisation. Unfortunately, there is a great divide between what retailers say they value as far as training is concerned, and what actually takes place in the typical store. Many UK managers receive no training of any kind, and those that do receive less than one day each year (Harding 1991). This is important because 97% of the same group that reported little or no training said that training for managers was very important (Harding 1991). This leaves a disturbing gap between what leadership states they think should be occurring and what their companies are actually doing. This is particularly true of stores facing financial hardship; companies were more likely to cut training when business was struggling, and more likely to invest in training when things were going well (Thompson 2004).
Over sixty percent of respondents surveyed by CIPD stated they had experience resistance from their immediate supervisor when requesting or attending training opportunities (CIPD 2002). Lack of training is also more prevalent in smaller organisations. The Wales Management Council found there was a lack of training provision for workers in small and medium-sized businesses in crucial management areas. Company leadership overwhelmingly claimed to value training and to be seeking training solutions, but few were forthcoming or invested in such (Anon 2003). Many smaller retailers adopted “a simplistic attitude toward training and development programmes, failing to see them as anything more than a cure-all for the problems of staff retention” (Benady 2005, 41).
However, firms that actually implemented and supported well-designed and relevant training programmes reported a positive impact on corporate culture. These organisations were more likely to culturally support learning as an ongoing need in general, and encourage both job-specific and lifelong learning participation (CIPD 2004). Thorntons’ brand training programme was developed to combat falling sales, but does so from a cultural perspective. The programme seeks to “educate staff about how they can embody Thorntons’ brand values, such as artistry and craft” (Kleinman 2003, 2). This allows staff to both embrace the core values of the organisation, and increases the likelihood they will communicate these values on to the customers.
An important consideration in enabling and encouraging staff to embrace company culture is their own personal background. CIPD (2002) found “a substantial gap between the ‘haves’ and the ‘have-nots’” on a given worksite (14). That is, those who had greater education and educational success were more likely to receive training. In addition, those who had previously received training were more likely to be offered additional opportunities (CIPD 2002). The workers with the least skills were offered the least training, possibly because management saw them as having less potential and therefore less investment-worthy, or possibly because their jobs were seen as less important (Matthews 2004).
Effective training will similarly impact staff effectiveness and retention. Training can have both a positive impact on individual workers and staff as a unit. While Forrier and Sels (2003) found “no consensus in the literature about the connection between staff turnover and investment in training,” Benady (2005) reports companies have found training schemes can encourage staff retention (Forrier and Sels 2003, 150). In research done before developing the successful training scheme at BP, a majority of staff identified lack of training as a principle reason for high staff turnover and dissatisfaction (Anon 2002). “Many believe that improving training and professional development is a key plank in building staff loyalty and ensuring employees stick with a company for the long term” (Benady 2005, 41).
However, some retailers justify under-investment in training by citing the risk and likelihood of staff turnover (Forrier and Sels 2003). The company spends significant money and time in training and developing an employee, only to have them jump ship to a competitor who can offer higher wages because that competitor poaches employees from other companies rather than growing them from within themselves. “Companies which train extensively thereby generate higher turnover precisely because the trained personnel leave the company for better paid jobs where they can use the skills they have acquired” (Forrier and Sels 2003, 150). In these instances training has a positive impact on staff but not ultimately on the organisation.
However, staff turnover is itself a driver for training. New training initiatives within a low-turnover labour group can initially result in high staff turnover, particularly if training was not a common part of the firm’s previous culture (Bacon et al 1996). Companies who lose employees for whatever reason must increase their training investment to bring new hires up to speed (Forrier and Sels 2003). If the replacement is an internal promotion, training investment must be made in the promoted individual and in the person filling his or her original position, causing a vacancy chain. In a high-level promotion, this vacancy chain can create training requirements at several levels with the organisation, moving downward until an external candidate is finally brought in at a lower-level position (Forrier and Sels 2003).
Workers being promoted, although costly in training terms to the company, is in itself a positive impact from training. Employees who feel they are participating in a job with career development potential are nearly eighty percent more likely to remain with that job for one year or more than are employees with no recognisable career development (Messmer 2004). Similarly, promoted workers are able to draw on their experiences in previous positions, often reducing induction training time (Forrier and Sels 2003). Promotion from within has been shown to lead to a general increase in morale (Tharenou 1997). Higher morale, in turn, increases employee productivity, improves customer service, and reduces absenteeism (Tharenou 1997).
Training can have additional positive impacts on the employee. New skill development in any field, even something not related to the employee’s job, has been shown to increase the occurrence of learning in general. Those participating in training are significantly more likely to pick up increased skills on the job (Searle and Ball 2003). These additional accomplishments both increase the worker’s sense of value and self-worth, but also makes the worker a more efficient and valuable worker to the firm (Tharenou 1997).
Workers, for the most part, reported keen interest in training opportunities (Reade 2005). Nearly a quarter of CIPD survey respondents had participated in some form of lifelong learning, offered outside their place of employment, in the year considered (CIPD 2002). “Better educated people and those in higher social classes are more likely to receive training,” while employees with less education and from lower social classes are “more likely to feel their employers do not offer them enough training opportunities” (CIPD 2002, 3).
CIPD (2004) categorised employees into four groups in reponse to their attitudes towards training. “Career-aggressive achievers” focused on going as far as possible and desired training to improve their reputations and skills. “Transitioning achievers” have experienced a change in career focus due to a significant life event such as marriage or the birth of a child. They seek training to clarify what to do with their lives. “Aspiring backpackers” desire change, and pursue training that emphasises “portable knowledge and skills.” “Lifestylers,” finally, desire a job they like and can do well for a number of years, and seek training for security and job performance reasons (CIPD 2004, 19).
The motivations of each of these groups of workers will contribute to what they consider to be a positive training experience. From an investment standpoint, companies would be wise to consider the motives and goals of individual workers and worker groups in providing training offerings.
Training has the potential both to drain funds away from other organisational needs or to create a positive impact on a firm’s bottom line. As the retail industry created nearly 200,000 new jobs last year, there is a significant training investment requirement in preparing new hires alone (Matthews 2004). “Conservative estimates put the comprehensive cost of replacing a lost retail employee at twenty-five percent of the employee’s annual compensation amount” (Foy 2005, 50). Store-level managers, who often make the decision of how much training an employee receives, tend to focus on short-term sales growth and market share in evaluating their store’s success. This can cause them to sometimes put inadequately trained people in various positions within the store, particularly at peak seasons such as Christmas. “Managers who skimp on training, particularly for new employees, risk losing staff – and sales” (Cummings 2004, 26).
Staff turnover can also cause a significant disruption in sales cycles, and therefore significant loss in revenue. Given the significant disruption caused by staff turnover, both in morale and in profits, it therefore makes sense for companies to invest most extensively in company-specific trainings. The most successful retailers do this with long-term goals in mind, realising they might make more make more in the short-term by cutting back on training, but that such actions would result in a loss of profits and trained personnel over time (Anon 1998). Divett, Crittenden and Henderson (2003) recognise the importance of trained, stable staff on positive customer experience and its resulting loyalty.
Customer retention is particularly important in the fashion retail sector due to the costs of acquiring new customers. Satisfied customers may also create new business through referrals (Brabazon 2000). In addition, customer loyalty increases the typical spend of a consumer at that particular store (Divett, Crittenden and Henderson 2003). “As customer loyalty increases, employee loyalty may also in crease due to greater job satisfaction, resulting in lower staff turnover and lower training and hiring costs (Brabazon 2000, 28). It follows that “loyal, satisfied customers may indirectly reduce staff costs”in addition to increasing sales and profits (Brabazon 2000, 28).
“Ultimately, the objective of any firm is to attract and retain profitable customers” (Brabazon 2000, 28). Therefore, “investment in training and development is only truly effective if it realises benefits to the business in terms of skills and service improvements, staff retention and motivation, business improvements, increased turnover, and cost reductions (Morley 2002, 9). Indeed, many economists view the training level of a particular sector’s labour force as the prime engine, or at least a major contributor, to the sector’s economic performance (Acemoglu and Pischke 1999, F112).
Relatively little is known about the training and resulting impact on profits in small and medium-sized firms, as they tend to have less sophisticated HR management and reporting (Jameson 2000). However, several case studies from larger firms demonstrate the direct positive financial impact of training. For example, over ninety percent of CIPD (2004) respondents reported that training programmes which offer courses reinforced on the job, such as occurs in the typical coaching scheme, can have a positive impact on a firm’s bottom line (24).
Training investment has repeatedly demonstrated the ability to pay for itself in addition to boosting profits. For example, Mackays implemented a training programme for managers of multiple stores, to address concerns over falling profits. The training included instruction in project management, business planning, and presentation and meeting skills. The training was presented in modules which lasted eight hours or less each; these modules were held once each month for eighteen-months (Moore 2004). Assessments by the company following the training showed increased productivity and effectiveness amongst the managers who took part, which translated into increased profits (Moore 2004).
Similarly, Harris Associates devised a training programme for Egg, an online banking company, to provide operational staff with customer service training. Two years after implementation, Egg was able to “evidence clear tangible business benefits and improvements in quality and level of customer service” (Morley 2002, 11). This included a recordable, directly attributable positive impact on both sales and customer retention (Morley 2002). The Employment Relations Directorate of the DTI’s Regulatory Impact Assessment projected an increase of pounds 140m over eight years if employers would address literacy and numeracy issues amongst their most limited workers (Kent 2005).
To see clearly how staff and staff training impacts the current and future performance of an organisation, one must first consider principles of business strategy and operations as a whole. First, many companies do not clearly articulate their strategy, even though most recognise it as integral to the success of their business (Johnson and Scholes 2002). Not surprisingly, even fewer train their workers to understand and embrace corporate strategy (Styles and Goddard 2004). “Companies often drop training and development into their internal communication efforts with little thought about how it fits into the company’s business plan or staff needs” (Benady 2005, 41). Training, however, can have a powerful impact on strategy, and vice versa.
An effective strategy is composed of three components. First, it must have a clear definition of the company’s target customers: who they are, who they will be, and who they are not. Second, effective strategy must have a clear definition of its products or services: what the company will produce or offer and what it will not. Finally, the strategy must include a plan for how this will be achieved: how it will go about creating, producing and delivering its products or services to its target customers (Markides 2004). The typical worker on the sales floor, or even store management, cannot be expected to understand the store’s target customers, products and services, or operational methods without proper training. Training must both communicate strategy to staff and in turn empower staff to positively influence future strategy considerations (Styles and Goddard 2004).
In addition, as true strategy “focuses on shaping some aspect of the future environment” (Styles and Goddard 2004), both the company and its workers should consider strategy in light of where the organisation aims to be in five to ten years, rather than focusing on short-term profits or success (Johnson and Scholes 2002). This highlights the need for individual store personnel to concentrate on the long-term goals of the organisation. Unfortunately, in an industry with relatively high turnover and emphasis on short-term sales and profit quotas, this vital implementation of strategy is often overlooked (Alkhafaji 2003). This increases the importance of training and its impact on the creation, implementation, and communication of strategy within an organisation.
How corporate strategy is communicated throughout the organisation is highly a matter of culture, affected by a given company’s style, values, expectations, traditions, temperament and norms (Alkhafaji 2004). It is the responsibility of the senior management to decide strategy and communicate it to the rest of the personnel in the company, although every worker can and should be provided with some form of input (Markides 2004). Historically, tangible incentives such as bonuses or raises have been the primary motivator used to get people to buy into strategy, and as such the strategy is typically interpreted by workers based on the financial goals and returns an organisation receives (Johnson and Scholes 2002). Recently, however, companies have been surprised to discover some employees more highly value training has as an incentive, and are more likely to invest in the overall mission of the company when the company is willing to invest in them.
When faced with almost 100% turnover and tremendous staff dissatisfaction, a BP survey revealed that 60% of respondents cited “lack of training as a major factor for discontent and poor performance,” a significantly higher percentage than those citing low pay or unpleasant customers (Anon 2002, 14). BP, viewing training as a “tangible, effective and visibly beneficial” way to both communicate corporate strategy and empower workers, undertook a major training initiative, which resulted in a 45% reduction in staff turnover (Anon 2002, 14). The effectiveness of this training programme caused strategic change within the BP corporation, with increased emphasis on employee’s ability to communicate the company’s products and services, and their limits, as well as delivery and operational strategy elements (Anon 2002).
Similarly, Garavan (1997) found training in interpersonal skills facilitated communication between workers and management, and various levels of management, increasing the likelihood that communication of core corporate goals would be clearly presented to all company workers. Mackays, the clothing and homeware retailer, implemented a series of training workshops for store managers. The training goals were to enable store managers to more effectively communicate corporate strategy and goals to their workers, to increase store management effectiveness, and to improve store profitability.
Managers who participated were found to be better able to “gear their own stores to work as an integral part of Mackays” (Moore 2004, 32). Their head of HR claims that “by empowering our area managers, we have transferred some of the responsibility [for specific strategy components] from senior management so they can concentrate on core business strategy” (Moore 2004, 32).
Positioning is a main focus of strategy, that is, the ability of a company to create and follow an image and focus unique to itself. Such positioning helps to ensure the company will be successful in its market niche and that it will achieve its goals (Styles and Goddard 2004). Strategy is typically developed through a series of stages. Ideas are generated about the target customers, products and services, and methods and operations of the organisation, in that order (Markides 2004). In this area the input of store staff, who see and interact with the customers and products, in addition to providing most service each day, is vital (Johnson and Scholes 2002).
Many firms make the mistake of not including store staff in strategy considerations at this stage because they feel staff will not have relevant input. However, by establishing effective communication systems and training employees to be cognisant of corporate strategy, the company provides itself with vital, front-line market data on strategy components (Forgang 2004).
Following the generation of ideas described above, the possible ideas presented are analysed with consideration given to the trade-offs they represent (Johnson and Scholes 2002). For example, if a company decides to spend a certain amount on staff training, these are funds that are no longer available for promotions or increased inventory. As resources are always limited within the business environment, each strategy decision has a trade-off element that must be taken into account (Forgang 2004). This is the role of senior management, but again is impacted strongly in a successful retailer by the empowerment, often through training, of front-line managers and store personnel. The company has made a trade-off. Every decision has an element of trade-off, because resources are always limited (Forgang 2004). The impact of training at all levels of the corporation with an eye for strategy can have significant influence on an organisation’s success.
People are a key part of the successful retailer’s strategy for growth. In general, the more expensive the store, the higher expectations customers have of the service and professionalism exhibited by staff (Wearne and Morrison 1996). This positioning is a mental construct of a given company, and takes place in the mind of the consumer (Semenik and Bamossy 1995). For example, without the brand-name label, there is usually little to distinguish the skirt selling for 100 pounds that would really make it twice as good as the one selling at 50 pounds.
Positioning, therefore, allows a retailer to find and maintain a distinctive place within its given market, with significant implications for future growth. Some companies benefit from a perceived additional value, because the consumer believes the positioned firm to offer higher quality merchandise or superior service (Semenik and Bamossy 1995). Some of the ways this perceived additional value is created is by the service provided by employees and the physical appearance and of the facility and staff, recommendations of other customers, and customer perceptions of the people who appear to stop at the store (Wearne and Morrison 1996).
When a high number of stores exists, particularly smaller stores, the relationships that develop between customers and staff can become a way shops differentiate themselves from the crowd (McGauran 2001). The importance of customer loyalty on immediate profits has already been discussed. However, loyalty plays an even greater role in long-term financial stability and growth. Although sharply affected by seasonal change, fashion is a heavily repeat-customer sector, and in such industries loyalty is a strong indicator of future performance (Divett, Crittenden and Henderson 2003). It is vital in such a competitive arena that retailers not only attract new customers, but keep their existing shoppers. This is strongly influenced by customer service and therefore by training to staff. In addition, having the entire company invested in corporate strategy communicates a clear message to the customer, also increasing the likelihood of repeat purchases and increased spend (Johnson and Scholes 2002).
This study examined representative training programmes from four retail establishments: Arcadia, New Look, Marks and Spencer, and Budgens. Primary research for training programme analysis included gathering and comparing information related to the training and its impact on each retailer. Data was collected from materials made available by these firms, and information available to the general public. This was primarily via the firms’ websites and the websites of retail-related organisations. Research focused on the return on investment for various training schemes, and how training impacted a retailer’s ability to achieve long-term stability and sustainable financial growth. Specific areas considered in relation to the potential impact of training on strategic change included impacts on strategy, culture, staff, profits, and long-term financial growth.
All four retailers were found to offer effective training, although training methods varied. Arcadia’s Management Programme combining formal workshop-based instruction with on-the-job training and coaching (Anon 2005a). New Look provides modular instruction, followed by a less-structured opportunity to apply things learned on the job (Weekes 2004). Marks and Spencer offer a formal and highly structured mentoring programme, while Budgens provided training in primarily a retreat format, with a combination of coaching and mentoring follow-up (Anon 2002a, Anon 2000). Training frequency ranged from a high of over five average training days per month at Arcadia, to less than one training day per month at Marks and Spencer and Budgens. The longest training components in the cases studied were the two-week coached placements provided by Arcadia and the five-day residential courses offered by Budgens (Anon 2005a, Anon 2000).
Training content, surprisingly, focused on or contained a strong component of general management skills at three of the four retailers. This is in contradiction with findings of the literature review, and therefore not anticipated. Soft skills, such as interpersonal communication, goal setting, personal assessment, and time management were present in all four training schemes (TSC 1998, Weekes 2004, Carrington 2004, Anon 2000). Skills and training specific to the retailer were also included in all four training offerings. New Look provided the most store- and job-specific training, which may be in part due to the training being designed for both store managers and sales floor staff (Weekes 2004). Arcadia offered the next highest amount of store-specific training, but due to the much greater overall amount of training included in this programme, this was to be expected. The most common store-specific skills involved implementation of company policy in planning, personnel and reporting subjects (Anon 2005a, Weekes 2004, Carrington 2004, Anon 2000).
Training schemes in all four retailers were found to be effective, providing instruction in areas of value to both the employer and employee, in a manner that reinforces the overall goals and strategy of the organisation. The training was further determined to be regular and standard throughout the organisation, and subjected to continuous improvement principles such as assessment of effectiveness. Finally, all four firms were able to link increased financial gains to training initiatives.
Training programmes studied in this research all had positive impact on culture. All demonstrated a perceived commitment to training and people on the part of the employer improved employee perception of the firm and increased worker buy-in to corporate goals. This was particularly evidenced at New Look, where the HR Director personally interviewed the six-hundred initial workers to be trained one at a time to communicate New Look’s overarching goals and the specific goals of the training programme, how each employee contributed to these overarching goals and the training programme, and how each employee would personally benefit from participation in training and embracing the stated goals (Weekes 2004). Equally impressive was the change in Budgens’ culture, particularly in individual stores where managers participated in the training scheme.
Employees reported a significant improvement in their perception of the retailer, while the company boats the training programme “is underpinning a major cultural change across the company” (Anon 2000. In its assessment of Arcadia’s Management Programme, the Training Standards Council noted a clear understanding of the company’s wider culture, and linked this in part to training received by incoming managers as part of the Management Programme (TSC 1998). The mentoring programme at Marks and Spencer allows lower level employees to learn the perspectives and aims of the employees above them, thereby reinforcing the broader corporate culture of the retailer as a whole and reinforcing the M&S emphasis on quality, value and service (Carrington 2004).
All four trainings resulted in an increased view of long-term development needs within the companies. All companies offered training incrementally, as was supported in the findings of the literature review, for long-term training programmes, thereby reducing the likelihood of employees being poached by competitors and the training organisation loosing their investment. All four programmes also reported increase in communication of culture to consumers, with New Look, Arcadia, and Budgens all identifying increased desire to work at their firms resulting from training schemes. Of the four firms reviewed, only Budgens reported increased education for workers as empowering them to greater adoption of corporate culture (Anon 2000). There is an implication of such at New Look, particularly with their emphasis on younger hires, but nothing is specifically stated or linked (Anon 2004, Weekes 2004, New Look 2005).
One of the most significant recorded results of the training initiatives presented in the four case studies was the impact on staff. All four reported increased staff effectiveness and retention following training. Of particular note is Budgens, which documented a decrease in staff turnover from eighty to a current twenty percent, and linked this decrease directly to the effectiveness of its training scheme (Anon 2000, Budgens 2005). Similarly New Look, which previously had to aggressively recruit to fill openings but now experiences more applications than it has openings, which it also links to improved training (Anon 2004).
Marks and Spencer projects its mentoring programme will also decrease staff turnover, although hard evidence is not currently available (Carrington 2004).
All companies report an increase in internal promotion through training initiatives. Arcadia reports those completing its Management Programme typically receive their first management position within one year (Anon 2005a). In addition, these management placements are likely to be promoted again within two years (Anon 2005a). None of the companies reported an increase in the occurrence of learning experiences in general, as was predicted by the literature review, but none of them also appeared to make any effort to document such data.
Finally, all four companies reported significant increases in employee satisfaction due to training programmes. At Arcadia, employees are “enthusiastic” about the training programme, and values their “roles in the training process” (TSC 1998, 12). Participants in the Management Programme are reported to be highly enthusiastic and motivated by the training offerings (TSC 1998, Anon 2005a). New Look employees receive training are similarly “extremely satisfied” with the training and pay programme, while Marks and Spencer reports a high level of interest and pursuit of mentoring opportunities (Anon 2004, Carrington 2004). Budgens has experienced a drastic shift in employee job satisfaction and a resulting improvement in general working conditions through its management training scheme (Anon 2000, Budgens 2005).
New Look and Budgens both linked their training programmes to increased profits and reduction in costs. At New Look, their programme has led to an annual savings of pounds 2.9 million. This comes from reduced staff absenteeism, reduced staff turnover, and increased staff productivity. The company has used pounds 600,000 of this to underwrite the pay increases that reinforce the training initiative, thereby removing overhead costs from the programme (Anon 2004). At Budgens, “strategic planning has seen sales figures increase and wastage figures reduced considerably (Anon 2000).
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